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Revision 11-15-2020
HOME MORTGAGE PROGRAMS
OPERATING MANUAL
CONNECTICUT HOUSING FINANCE AUTHORITY
999 West Street, Rocky Hill, CT 06067-4005
Main: (860) 721-9501 Fax: (860) 571-3550
Website: www.chfa.org
Revision 11-15-2020
Table of Contents
SECTION 1 – GENERAL INTRODUCTION
1.1 Preface
1.2 Organization
SECTION 2 – PROGRAM INFORMATION
2.1 Qualification of Participating Lenders
2.2 Distribution of Mortgage Funds
2.3 Funds Available for Targeted Areas
2.4 Commitment for Mortgage Purchase
2.5 Retention and Inspection of Records
2.6 The Federal Recapture Tax
SECTION 3 – ELIGIBILITY
3.1 Eligible Borrowers
3.2 Eligible Dwellings
SECTION 4 – REHABILITATION MORTGAGE LOANS
(203(k) Standard and 203(k) Limited)
4.1 Program Descriptions
4.2 Borrower Eligibility
4.3 Property Eligibility
4.4 Principal Residence Requirement
4.5 Rehabilitation Loan Amounts and Eligible Repairs
4.6 Builders and Contractors
4.7 Contracts and Rehabilitation Work Specifications
4.8 Completion of Work and Construction Period
4.9 Post-Closing Inspection
4.10 Rehabilitation Escrow Account
4.11 Additional Documentation
4.12 Origination Fee and Closing Costs
Revision 11-15-2020
SECTION 5 – UNDERWRITING (See Section 8 for DAP Underwriting)
5.1 Credit Review
5.2 Applicant Processing
5.3 Mortgage Insurance or Guaranty
5.4 Closing Costs
5.5 Loan Submission to CHFA for Commitment
5.6 Delegated Underwriting (LEAN)
SECTION 6 – LOAN PREPARATION
6.1 Terms and Conditions of Loans
6.2 Title Insurance
6.3 Hazard/Flood Insurance
6.4 Property Description
6.5 Appraisal Requirements
SECTION 7 – LOAN PURCHASE
7.1 Closing Procedures
7.2 Purchase of Committed Loans
7.3 Release of Loan Servicing
7.4 Preparation of Mortgage Releases
7.5 Assumption of Loans
SECTION 8 – DOWNPAYMENT ASSISTANCE PROGRAM
8.1 Qualification of Participating Lenders
8.2 Funds Availability
8.3 Eligibility
8.4 Computation of DAP Loan Amounts
8.5 Application Processing
8.6 Loan Preparation
8.7 Loan Purchase
8.8 Servicing
8.9 Credit Review
8.10 Income
8.11 Co-Signers
8.12 Underwriting Ratios
8.13 Credit Reports
8.14 Credit Scores
8.15 Delinquent Credit
8.16 Property Repairs
Revision 11-15-2020
SECTION 9 – RESERVED FOR FUTURE USE
SECTION 10 - APARTMENT CONVERSION FOR THE ELDERLY (ACE)
10.1 Introduction
10.2 Eligibility
10.3 Application Process
10.4 Terms and Conditions
10.5 Construction Requirements
SECTION 11 – INVESTOR REPORTING AND REMITTANCE
11.1 Billing Overview
11.2 Remittance of Funds
11.3 Reporting
SECTION 12 – DELINQUENCY & FORECLOSURE REPORTING
12.1 List of Approved Law Firms
12.2 Claims Submission and Expense Reimbursement
12.3 90 Days or More Delinquency Reporting
12.4 90 Day Delinquency Form
12.5 Code Translation Table Form
12.6 Foreclosure Initiation/Action Notification Reporting
12.7 CHFA Foreclosure Approval Initiation/Action Notification
12.8 Additional Changes to Current Requirements
12.9 Safekeeping of Authority Documents
12.10 CHFA Delinquency Intervention Counseling Program
12.11 Sample Reporting Stream
SECTION 13 – RESERVED FOR FUTURE USE
SECTION 14 – GLOSSARY OF TERMS
Rev. 4-2015 Page 2
SECTION 1 – GENERAL INTRODUCTION
1.1 Preface
This Operating Manual (the “Manual”) has been prepared by the Connecticut Housing
Finance Authority (CHFA) to provide Loan origination and operating guidelines for
Participating Lenders in its Home Mortgage Purchase Program. This Manual supersedes
all prior operating manuals, program bulletins or other home mortgage program materials
distributed by CHFA.
CHFA mortgage loans are available to borrowers who meet income and other eligibility
criteria described in this Manual, at a below market interest rate based on the sale of
CHFA bonds. In addition, CHFA finances home mortgages in Targeted Areas without
regard to income limits providing the borrower(s) are not obtaining a downpayment
assistance loan with CHFA. CHFA does not refinance existing mortgage loans, except
when coupled with substantial rehabilitation, or as part of a “special program” initiative
authorized by the Authority.
The purpose of the Home Mortgage Purchase Program is to further the general policies of
Chapter 134 of the Connecticut General Statutes, including the specific statutory
objectives of:
A. Providing funds for long-term mortgage financing of residential housing
for occupancy by low and moderate income persons and families in
Connecticut; and
B. Encouraging the development of balanced communities of all income
levels in cities which qualify as Urban Areas under the Act.
1.2 Organization
This Manual is intended to provide policy guidelines and detailed instructions for the
performance of the written agreements between CHFA and its Participating Lenders.
Accordingly, the provisions of this Manual are subject in all respects to the provisions in
the Authority’s procedures and the definitive terms of the Master Commitment
Agreement for Mortgage Purchases and the Home Mortgage Servicing Agreement in
effect from time to time.
From time to time, CHFA may revise this Manual by issuing changed or additional
pages, or with the publication of CHFA Notice to Participating Lenders or CHFA
Bulletins. Notices to Participating Lenders and CHFA Bulletins will be sent to the
Rev. 4-2015 Page 3
Participating Lender designated authorized staff and simultaneously posted on the CHFA
website at www.chfa.org.
As noted throughout the Manual, CHFA requires the use, as appropriate, of FHA, VA, or
FNMA/FHLMC printed Mortgage Deed and Promissory Note forms in all cases.
Participating Lenders are responsible for processing and servicing Loans in accordance
with specific FHA, VA, USDA-RD, CHFA or private mortgage insurance (PMI)
requirements, when applicable, and only general reference is made to those requirements
in this Manual.
Throughout this Manual masculine references shall include both genders or either gender,
as appropriate.
Rev. 1-2017 Page 1
SECTION 2 - PROGRAM INFORMATION
2.1 Qualification of Participating Lenders
2.2 Distribution of Mortgage Funds
2.3 Funds Available for Targeted Areas
2.4 Commitment for Mortgage Purchase
2.5 Retention and Inspection of Records
2.6 The Federal Recapture Tax
Rev. 1-2017 Page 2
SECTION 2 - Program Information
2.1 Qualification of Participating Lenders
General
A “Participating Lender” is a lending institution that cooperates with CHFA in making
funds available under its’ home mortgage program by making and/or servicing mortgage
loans that CHFA has agreed to purchase.
A. Lending Capability
To be approved as a Participating Lender to originate mortgage loans, a lending
institution must meet the following criteria:
1. Have in Connecticut, a brick and mortar facility with the capacity and
personnel to originate and close mortgage loans, as determined by the
Authority;
2. Unless it is a FDIC or FSLIC insured deposit-taking institution
incorporated and existing under the laws of Connecticut, have twelve (12)
months’ experience in making mortgage loans on homes located in
Connecticut. In the case of those institutions that acquire an institution in
Connecticut, where the acquired institution meets the experience
requirement, the acquired institution shall be deemed to meet the
experience requirement;
3. Maintain a minimum tangible net worth of $1,000,000 or provide a letter
of credit, available and otherwise uncommitted line of credit, bond or
other financial instrument acceptable to the Authority totaling such
amount;
4. Be in compliance with applicable federal and state laws, regulations
promulgated thereunder and any licensing requirements by agencies of
government having jurisdiction;
5. Maintain quality control and management systems to evaluate and monitor
the overall quality of its origination activities, and
6. Execute the standard Master Commitment Agreement for mortgage
purchases.
Rev. 1-2017 Page 3
B. Servicing Capability
To be approved by CHFA as a Participating Lender to service Authority loans, the
institution must meet the following criteria:
1. Have the capacity and personnel to service mortgage loans, as determined
by the Authority;
2. Demonstrate a proven ability to service the type of mortgages for which
Authority approval is being requested;
3. Maintain a minimum tangible net worth of $1,000,000 or provide a letter
of credit, available and otherwise uncommitted line of credit, bond or
other financial instrument acceptable to the Authority totaling such
amount;
4. Be in compliance with applicable federal and state laws, regulations
promulgated thereunder and any licensing requirements by agencies of
government having jurisdiction;
5. Maintain quality control and management system systems to evaluate and
monitor the overall quality of its servicing activities; and
6. Execute the standard Home Mortgage Servicing Agreement and/or other
contracts as determined by the Authority.
C. Removal of a Participating Lender
CHFA may terminate the Master Commitment Agreement for Mortgage
Purchases and/or the Home Mortgage Servicing Agreement according to their
terms, respectively, and remove from the list of approved Participating Lenders
any lending institution that has;
1. Failed to commit, close and/or service Mortgage Loans in accordance with
the Act, the Procedures of this manual, and the Master Commitment
Agreement for Mortgage Purchases, and/or the Home Mortgage Servicing
Agreement or;
2. Ceased to meet the criteria for becoming a Participating Lender. CHFA
may terminate the Master Commitment Agreement for Mortgage
Purchases and/or the Home Mortgage Servicing Agreement in accordance
with the provisions thereof. Such removal shall take place thirty (30) days
after written notice to such Participating Lender specifying the reason for
the removal.
Rev. 1-2017 Page 4
D. Lending Areas
Participating Lenders are not required to go beyond their normal geographic
lending areas.
E. Availability of Program
Participating Lenders shall not restrict applications for Loans to any segment of
the Homebuyer Mortgage Program, except that a participating lender need not
accept applications for Rehabilitation Mortgage Loans (see Section 4) and need
not accept applications for mortgage loans on homes located outside its normal
geographic lending areas.
F. Training Session
After CHFA has approved a Participating Lender, the Participating Lender shall
promptly have a training session with CHFA staff prior to originating a CHFA
loan. The training session shall cover CHFA's requirements in regard to
originating and closing loans, providing CHFA with the required loan documents
after closing, and, where appropriate, servicing requirements. CHFA shall have
the right to require a Participating Lender to have a retraining session when CHFA
deems it appropriate.
G. Correspondent Lender Relationships
A Participating Lender may sponsor a "Correspondent Lender" with the prior
written approval of the Authority. The Sponsoring Participating Lender will be
required to meet and provide evidence of a minimum tangible net worth of
$1,000,000 in order to sponsor a Correspondent Lender. To be approved as a
Correspondent Lender by the Authority, the Correspondent Lender must meet the
same criteria for a Participating Lender as described in subsection (A.) above,
except as follows:
1. Have a minimum tangible net worth of $50,000;
2. The Correspondent Lender may be required to execute the standard Master
Commitment Agreement for Mortgage Purchases and the standard Home
Mortgage Servicing Agreement although a standard letter agreement
between the parties will be executed by both parties;
3. The Correspondent Lender may be required to attend a training session(s)
prior to originating any CHFA loans on behalf of the Sponsoring
Participating Lender and any additional training session(s) as the Authority
deems appropriate; and
Rev. 1-2017 Page 5
4. Conform to guidelines as required by the Connecticut Department of
Banking and/or the Authority regarding licensing of a Correspondent
Lender in the State of Connecticut;
5. Veterans Administration (VA) and Federal Housing Administration (FHA)
approval are not required.
An approved Correspondent Lender may originate home mortgage loans on behalf of a
Sponsoring Participating Lender. However, the Sponsoring Participating Lender shall
remain fully responsible to the Authority for its obligations pursuant to these procedures,
the CHFA Home Mortgage Program Operating Manual, and the Master Commitment
Agreement for Mortgage Purchases. Correspondent Lender Loans must be approved and
submitted by the Sponsoring Participating Lender. The Authority reserves the right to
limit the number of Correspondent Lenders and may rescind approval of a Correspondent
Lender at any time with (prior) written notice.
2.2 Distribution of Mortgage Funds
A. Availability of Funds
CHFA will not issue separate allocations to any particular Participating Lenders.
A funds reservation system which allows the borrower to apply for a CHFA Loan
at the Lender of his choice will be used.
CHFA reserves the right, however, to set aside a portion of the proceeds of any
issue of bonds on an uncommitted basis for any purpose of the Program.
Specifically, CHFA expects to set aside certain proceeds from each issue for the
purpose of making Mortgage Loans in Targeted Areas.
B. Reservation of Loan Funds
CHFA will administer the reservation program and Participating Lenders may
accept Loan applications from prospective borrowers.
1. The Participating Lender will determine if the prospective mortgagor is
qualified as an Eligible Borrower. Such preliminary determination shall
include the Participating Lender's examination of (i) the prospective
borrower's written purchase agreement concerning the property to be
financed, and (ii) a copy of the borrower's most recently filed Federal
Income Tax Return as an approximate indication of his income.
Rev. 1-2017 Page 6
2. After the Participating Lender has determined an applicant's eligibility for
CHFA financing, the lender will reserve mortgage funds using the CHFA
On-line Reservation System.
a. The reservation will be identified by an authorized reservation loan
number, which will be assigned by the on-line reservation system.
This reservation number must appear on the Loan submission to
CHFA and all subsequent correspondence regarding the Loan
submission.
b. The reservation of funds prior to Loan commitment is valid for
ninety (90) days unless extended by CHFA.
c. Loan reservations must include the names of all borrowers.
Substitute borrowers or the addition of or removal of a borrower to
qualify for the loan may NOT be permitted once the loan
reservation is secured.
3. The Participating Lender must notify CHFA of any cancellation of
reserved funds so that the funds may be made available for others. No
substitution of borrower will be permitted for reserved funds. No
substitution of property will be permitted for reserved funds except as
approved by CHFA in the case of a situation, outside of the control of the
borrower, causing hardship. CHFA may decline to reserve funds for an
applicant who has had other CHFA funds reserved.
C. Free Accessibility to Funds
Applications for Loans shall be based on eligibility and not on special
relationships between a Participating Lender and particular real estate brokers or
developers. A Participating Lender may not deny a Loan to an Eligible Borrower
solely because the Eligible Borrower is not a depositor or customer of the
Participating Lender. Neither may the Participating Lender limit the availability
of CHFA financing by denying an application based on the fact that the applicant
does not belong to a specified group of the public such as employees of certain
organizations. Under normal circumstances, applications should be taken and
processed on a "first-come, first-served" basis.
2.3 Funds Available for Targeted Areas
A. General
Rev. 1-2017 Page 7
In accordance with Federal requirements, CHFA will make funds available for
Eligible Dwellings located in Targeted Areas. CHFA will exercise due diligence
in making Mortgage Loans in Targeted Areas. Participating Lenders under
CHFA's direction shall assist in advising potential Eligible Borrowers of the
availability of funds in Targeted Areas.
B. Eligibility
Mortgage Loans for Eligible Dwellings located in Targeted Areas must comply in
all respects with the requirements in Section 3 and elsewhere in this Manual for
all Mortgage Loans except for the requirement in Section 3.1C that an Eligible
Borrower may not have had a present ownership interest in the Borrower's
principal residence in the three years preceding the application for the Mortgage
Loan. Also, with exception to section 3.1B where a borrower shall not have an
aggregate income in excess of the applicable limit established by CHFA unless
the borrower is also applying for CHFA Downpayment Assistance (contained in
appendix B).
2.4 Commitment for Mortgage Purchase
A. Obtaining a Commitment
The Participating Lender shall submit each Loan application to CHFA with
completed forms and documents referred to in Section 5 of this Manual.
Each Loan submission will be underwritten and analyzed by CHFA, and if
approved, a Commitment will be sent to the Participating Lender. The
Commitment will be effective for a period of 90 days as designated therein.
Loans will be purchased by CHFA in accordance with the Commitment and
pursuant to Section 7 of this Manual.
B. Commitment to be Based on Authorized Funds Reservation
Each Loan submission requesting a Commitment must be clearly identified with
the CHFA authorized reservation number previously assigned the mortgage loan
amount reserved, unless otherwise permitted by CHFA.
C. Extensions and Cancellations
Requests for extension or cancellation of a Commitment must be in writing and
signed by a mortgage officer or other authorized person of the Participating
Lender. Telephone cancellations will not be accepted. Requests should be
directed to the Single Family Homeownership Dept. of CHFA prior to expiration.
Rev. 1-2017 Page 8
2.5 Retention and Inspection of Records
Any documents required by this Manual or by State or Federal law, not delivered to
CHFA pursuant to a Commitment or purchase of a Loan, must be retained by the
Participating Lender or Servicer for at least two years after the date of purchase by
CHFA, or such longer period as may be required by law, and, if requested by CHFA, for a
reasonable period thereafter. If during such retention time CHFA requests original or
certified copies of such documents, the same must be delivered to CHFA. Where
appropriate, such documents may be kept on microfilm, micro card or other similar
photographic methods.
Participating Lenders must make all records and books maintained in connection with
Loans available for inspection by CHFA upon request during reasonable business hours.
The absence of documentation required to be retained by this section may, at the option of
CHFA, be construed to conclusively evidence a defect in such documentation under the
Master Commitment Agreement for Mortgage Purchases.
2.6 The Federal Recapture Tax
Congress enacted legislation in 1988, subsequently amended in October of 1990, to
recapture a portion of the "subsidized amount" from home buyers who receive qualified
mortgage bond assistance after January 1, 1991. This includes all buyers who use CHFA
Loans and Mortgage Credit Certificates (MCC), dispose of an interest in their residence
within nine (9) years of purchase, and whose incomes substantially increase. The amount
of Recapture Tax that Borrower(s) might have to pay depends on how much their
incomes have increased, their family size at the time of sale, the original amount of their
mortgage, the length of time they owned their home and any gain realized on disposition
of the home. The recapture amount is the lesser of:
(1) 50 percent of the gain realized on disposition, or
(2) A percentage of the subsidized amount. The percentage is the product
of the holding period percentage and the income percentage (both
discussed below).
The Borrower(s) is responsible for calculating and paying the Recapture Tax, if any, as
additional Federal tax liability for the tax year in which the interest in the home is
disposed. However, Participating Lenders are required to provide homebuyers with the
Authority's "Notice of Potential Recapture Tax Form 051-0597" and "Method to
Compute Recapture Tax Form 052-1195":
Rev. 1-2017 Page 9
A. No Recapture Tax is due and the Borrower(s) does not need to do the
calculation if any of the following occurs:
1. The Borrower(s) disposes of his home later than nine (9) years after the
mortgage loan is closed.
2. The home is disposed of as a result of the Borrower(s) death.
3. The Borrower(s) transfer the home either to his spouse or former spouse
incident to divorce and no gain of loss was incurred on the transfer and
included in his Federal taxable income.
4. The home was disposed of at a loss.
5. The Borrower(s) modified adjusted gross income for the year in which the
home is sold does not exceed the Threshold Income, adjusted for family
size, for such year. Modified Adjusted Gross Income is calculated as
follows:
Adjusted Gross Income from IRS 1040 $
Tax exempt income earned for the year +
Gain on sale of the home -
Modified Adjusted Gross Income = $
B. There are several steps required to calculate the actual recapture amount
owed. The following outlines the steps involved in the calculation:
1. Threshold Income (Adjusted Qualifying Income)
The first year Threshold Income is 5% greater than the maximum
allowable Federal income limit for the area in which the residence is
located at the time the borrower was qualified. Each year of the nine (9)
year holding period the Threshold Income is increased by 5% from the
previous year's Threshold Income. The Threshold Income for each of the
nine (9) years is provided to the Borrower(s) in the "Notice to
Mortgagor(s) of Maximum Recapture Tax and of Method to Compute
Recapture Tax on Sale of Home" letter which will be issued by CHFA at
the time of issuance of the Commitment.
Rev. 1-2017 Page 10
2. Holding Period Percentage
The percentage is based on the month in which the disposition occurs after
the loan closing date pursuant to the following table:
Disposition Within Month of Closing
1-12 - 20%
13-24 - 40%
25-36 - 60%
37-48 - 80%
49-60 - 100%
61-72 - 80%
73-84 - 60%
85-96 - 40%
97-108 - 20%
3. Maximum Recapture Amount
The Federally subsidized amount which is 6.25% multiplied times the
highest principal amount of the mortgage loan, multiplied times the
Holding Period Percentage.
4. Income Percentage
The modified adjusted gross income of the Borrower(s) for the taxable
year in which the disposition occurs minus the Threshold Income divided
by $5,000.
5. Adjusted Recapture Amount
The Maximum Recapture amount multiplied times the Income Percentage.
6. Recapture Amount
Equals the lesser of the Adjusted Recapture Amount or 50 percent of the
gain realized on the disposition.
C. Limitations and Special Rules on Recapture Tax
1. If you give away your home (other than to your spouse or ex-spouse
incident to divorce), you must determine your actual Recapture Tax as if
you had sold your home for its fair market value.
Rev. 1-2017 Page 11
2. If your home is destroyed by fire, storm, flood, or other casualty, there
generally is no Recapture Tax if, within two (2) years, you purchase
additional property for use as your principal Residence on the site of the
home financed with your original subsidized mortgage Loan.
3. In general, except as provided in future regulations, if two or more persons
own a home and are jointly liable for the subsidized mortgage Loan, the
actual Recapture Tax is determined separately for each person based on
their interests in the home.
4. Refinancing of the Loan does not result in a Recapture Tax. If the home is
disposed of subsequent to the refinancing, but prior to the original nine (9)
year holding period, Recapture Tax may be due.
5. CHFA Reimbursement for Recapture Tax Payment
Borrower(s) that are required to make a recapture tax payment may be
eligible to receive reimbursement from CHFA.
To request reimbursement from CHFA borrower(s) must submit a written request to
CHFA no later than December 31st of the year that the federal recaptures tax is owed and
paid. For example: if the subject property is sold in 2013 and the tax return is filed in
2014, the request for reimbursement must be filed no later than December 31, 2014.
D. Filing the CHFA Reimbursement Request
To request Recapture Tax Reimbursement borrower(s) must submit a written
request to CHFA along with the following documentation:
1. A copy of the TRID – Closing Disclosure (Formerly HUD- 1 Settlement
Statement) - proof of sale of the property or, in the instance where the
home is disposed of by a method other than sale, documentation
evidencing the transfer of title and the Recapture Tax assessment;
2. A copy of the signed, filed Federal Tax Return, along with all schedules
including IRS Form 8828, for the year in which the Recapture Tax was
assessed and paid; and
3. An original signed IRS Form 4506-T completed by each person listed as a
borrower under the mortgage loan documents, authorizing CHFA to obtain
a copy of each such borrower’s Federal Tax Return.
4. Evidence of payment of the Recapture Tax.
5. Recapture Tax Reimbursement Request (CHFA Form 049-0313)
Rev. 1-2017 Page 12
6. Mail the complete Recapture Tax request package to:
Connecticut Housing Finance Authority (CHFA)
Residential Mortgage Programs – Recapture Tax Reimbursement
999 West Street
Rocky Hill, CT 06067
Note: CHFA may require additional information and/or documentation in order to approve a
request for reimbursement and such approval shall be granted at the sole discretion of CHFA,
subject to funding constraints and applicable statutory and procedural requirements.
Rev. 11-2017 Page 2
Section 3 – Eligibility
3.1 Eligible Borrowers
To qualify for CHFA financing, an applicant must meet the eligibility criteria set forth in
this section.
A. General
An applicant shall be an Eligible Borrower for a CHFA Mortgage Loan if the applicant
meets the following criteria:
1. At the time of application and at the time of mortgage closing, has an annual
aggregate income that is at or below the applicable income limit in effect at the time
the application was taken or is purchasing an Eligible Dwelling in a Targeted Area
(Section 2.3B);
2. Agrees to occupy and use the residential property to be purchased for a permanent,
principal residence within 60 days after the date of the closing of the Mortgage
Loan (See exceptions applicable to 203(k) Rehabilitation Mortgages – Section 4).
Applicant must also agree to occupy the property as their primary residence for the
term of the CHFA mortgage loan. (Section 3.1D);
3. If the applicant currently owns his or her own home now, or has owned a home
within the past three years, he or she may still be eligible for a CHFA mortgage
loan if he or she is buying a home in a Targeted Area or is participating in a CHFA
approved special loan program that is designated specifically for first-time
homebuyers and existing homeowners.
4. Will not use the proceeds of the Mortgage Loan to acquire or replace an existing
mortgage or debt, except in the case of certain types of temporary financing
(Section 3.1E). Rehabilitation Mortgage 203(k) Limited Program (Section 4);
5. Possesses and demonstrates the legal capacity to incur the obligations of the CHFA
Mortgage Loan;
6. Possesses and demonstrates the ability to repay the CHFA Mortgage Loan
(Section 5);
7. Has contracted to purchase an Eligible Dwelling (Section 3.2) or will undertake
Rehabilitation Mortgages on his or her dwelling or on a dwelling he or she has
contracted to purchase (Section 4) and
8. Has executed a Borrower Certificate at the time of the Loan application.
Rev. 11-2017 Page 3
9. Has at the time of application, a social security card as evidence of permanent
residency in the United States. Consular Identification Cards (CID) or Individual
Taxpayer Identification Numbers (ITIN) are not acceptable replacement
documentation for U.S. Government issued social security numbers. The applicant
does not need to be a citizen of the United States.
10. The applicant must purchase a home in the State of Connecticut.
B. Income
An Eligible Borrower and/or co-borrower shall not have aggregate income in excess of
the applicable income limit established by CHFA (contained in Appendix B) and in
force at the time of application for the Mortgage Loan unless the Borrower is
purchasing in a Targeted Area as described in (Section 2.3B).
Aggregate borrower income shall include income from whatever source derived,
including without limitation:
Regular earnings
Part-time earnings
Unemployment compensation
Bonuses
Overtime income, whether or not guaranteed by an employer
Dividends
Interest (except on funds being used for down payment and closing costs)
Commissions
Military allowances
Welfare payments
Disability payments
Pension, annuity, retirement, and social security benefits
Reimbursement for services in military reserve or National Guard.
The Authority may at its option exclude overtime income where it deems such income
to be of short duration and of a temporary nature.
Aggregate income shall be based solely on the income of the mortgagor or mortgagors
(borrower and co-borrowers) only.
1. Calculating Rental Income for 2-4 Unit Dwelling
The rental income from units in a two to four unit dwelling that will be added to the
borrower’s income to qualify for repayment of the mortgage loan debt will be based on
the percentage of the anticipated fair market income consistent with the loan program,
i.e. follow the guidelines of the loan insurer, FHA, VA, USDA-RD, PMI or CHFA
special program, when applicable.
Rev. 11-2017 Page 4
C. Three-Year Requirement
An Eligible Borrower does not include any borrower who, at any time during the three
years preceding the date of application for the Mortgage Loan, had a “present
ownership interest” (as hereinafter defined) in his principal residence. This
requirement does not apply to Mortgage Loans for Eligible Dwellings located in
Targeted Areas. If applicable, the Borrower must certify on the Borrower Certificate
that at no time during the three years preceding the closing of the Mortgage Loan has
he had a present ownership interest in a principal residence.
Eligible borrowers that have a “present ownership interest” in a principal residence
located in any part of the United States, its Commonwealths or Territories are subject to
these requirements and residential properties outside of the United States.
1. Definition of Present Ownership Interest
a. “Present ownership interest” includes:
i. A fee simple interest
ii. A joint tenancy, a tenancy in common, or a tenancy by the entirety;
iii. The interest of a tenant shareholder in a cooperative;
iv. A life estate;
v. A land contract, under which possession and the benefits and burdens of
ownership are transferred although legal title is not transferred until some
later time;
vi. An interest held in trust for the Eligible Borrower(s) (whether or not created
by the Eligible Borrower(s)) that would constitute a present ownership
interest if held directly by the Eligible Borrower(s); and
vii. Occupancy of a property for which an interest in real estate was created by
the existence of an inheritance, probated or not, whether title is vested or
not.
b. Interests which do not constitute a “present ownership interest” include:
i. A remainder interest,
ii. An ordinary lease with or without an option to purchase,
iii. A mere expectancy to inherit an interest in a principal residence,
iv. The interest that a purchaser of a residence acquires on the execution of an
accepted offer to purchase real estate, and
v. An interest in other than a principal residence during the previous (3) years.
vi. An interest in a mobile home that is not permanently fixed to land and
which mobile home is not considered real property for local tax purposes.
vii. Ownership interest in a vacation timeshare with limited occupancy on an
annual basis.
viii. Land only.
Rev. 11-2017 Page 5
2. Disposal of Other Residential Property
a. In cases where a borrower, such as in a Targeted Area, is in the process of
selling such residential property or has sold it during the six months prior to the
date of application for the Loan, the Borrower shall apply the equity proceeds
from the sale of the property (if any) as a downpayment on the Eligible
Dwelling. The borrower may deduct payoff of the present mortgage, real estate
commissions and reasonable closing costs on the home being sold in
determining equity proceeds.
b. Any real estate that is owned by the borrower and used by the borrower as a
residence shall be disposed of or under bona fide contract for sale before the
closing on the CHFA Loan.
c. A borrower may not have an ownership interest in any other primary residential
property that has been owner occupied in the past 3 years at the time of the
mortgage loan closing.
3. Persons Covered
This requirement applies to any person who will execute the mortgage or note and
will have a present ownership interest (as defined in Section 3.C.1) in the Eligible
Dwelling.
4. Prior Tax Returns
To verify that the Eligible Borrower meets the three year requirement, the
Participating Lender must obtain copies of signed Federal Income Tax Returns
filed by the Eligible Borrower for the three years preceding the closing of the
mortgage. Certified copies of the IRS Returns or Transcripts from the IRS are also
acceptable. If the Eligible Borrower was not required by law to file a Federal
Income Tax Return for any of these three years and did not file and so states on the
Borrower Certificate, the requirement to obtain a copy of the Federal Income Tax
Return for such year is waived, however; the Eligible Borrower must request a
“Verification of Non-Filing Letter” from the IRS that will provide proof that the
IRS has no record of a filed 1040, 1040A, or 1040EZ, or any other applicable
return or schedule, for the year(s) requested. In such cases the borrower must also
provide a written statement of explanation regarding non-filing of return.
a. All Eligible Borrower(s) and Co-Borrower(s) applicant(s) who will sign the
CHFA Mortgage Note and Deed at closing are subject to the Federal Income
Tax Return requirements.
Rev. 11-2017 Page 6
b. In addition, the Participating Lender must obtain an executed Request for Copy
or Transcript of Tax Form (IRS Form 4506) or a Tax Information Authorization
IRS Form 8821) for the prior three years. The Participating Lender shall
examine the Federal Income Tax Returns particularly for any evidence that the
Eligible Borrower may have claimed deductions for property taxes or for
interest on indebtedness with respect to real property constituting his principal
residence or on ineligible temporary financing.
c. In cases where the three year requirement regarding prior homeownership is not
applicable, such as loans in Targeted Areas, only the Federal Income Tax Return
and the Request for and Consent to Disclosure of Federal Income Tax Returns
for the most recent year is required. In such cases, one year may be substituted
for any references in this Manual to three years; and the Participating Lender
may manually modify any references in CHFA forms to three years to one year
as applicable.
d. Eligible borrowers that have a “present ownership interest” in a principal
residence located in any part of the United States, its Commonwealths or
Territories are subject to these requirements and residential properties outside of
the United States.
5. Lender’s Responsibility to Verify Documentation
Participating Lender must, with due diligence, verify the information in the
Borrower Certificate regarding the applicant’s prior residency and verify such
other information including Federal Income Tax Returns furnished by the Eligible
Borrower for the preceding three years, and certify to CHFA that on the basis of its
investigation, such information is to the best of its knowledge and belief, true and
accurate and evidences compliance with the requirements of this section. Such
certification shall be made on the Participating Lender Certification.
D. Principal Residence Requirement; Owner-Occupancy
1. General
An Eligible Borrower shall covenant to occupy the Eligible Dwelling as a principal
residence within 60 days after the closing of the Mortgage Loan. Unless the
residence can reasonably be expected to become the principal residence of the
Eligible Borrower within 60 days of the Loan closing date, the residence will not be
considered an Eligible Dwelling and may not be financed with a CHFA Mortgage
Loan. An Eligible Borrower must covenant to occupy the Eligible Dwelling as a
principal residence within 60 days after the Loan closing on the Borrower
Certificate and as part of the CHFA Uniform Mortgage Rider. See exceptions
Rev. 11-2017 Page 7
related to Rehabilitation Mortgages - 203(k) Standard and 203(k) Limited Mortgage
Programs (Section 4).
2. Definition of Principal Residence
A principal residence does not include any residence which can reasonably be
expected to be used: (a) in a trade or business, except for a two to four family
residence, in which case the Eligible Borrower shall be permitted to rent or lease the
non-owner-occupied unit(s), (b) as an investment property, or (c) as a recreational
or second home. Not more than fifteen percent (15%) of the total living area of a
residence may be used in a trade or business which would permit any portion of the
costs of the Eligible Dwelling to be deducted as an expense for Federal Income Tax
purposes (except in the case of a two to four family residence, in which case the
Eligible Borrower shall be permitted to deduct for Federal Income Tax purposes the
costs associated with the non-owner-occupied units).
3. Land Not to be Used to Produce Income
The land financed by the Mortgage Loan may not provide, other than incidentally, a
source of income to the Eligible Borrower. The Eligible Borrower must indicate on
the Borrower Certificate that, among other things:
a. No portion of the land financed by the Mortgage Loan provides a source of
income (other than incidental income);
b. The borrower does not intend to farm any portion of the land financed by the
Mortgage Loan; and
c. The borrower does not intend to subdivide the property nor to apply for a
zoning variance regarding minimum lot size or set-back requirements.
4. Post-Closing Inspection of Eligibility
Within 60 days after the closing of the Mortgage Loan, the Participating Lender is
required to inspect the Eligible Dwelling for compliance with the principal
residence requirements of:
a. No trade or business;
b. Owner-Occupancy use as permanent principal residence; and
c. No prohibited use of the land
Based upon such investigation, the Participating Lender shall either:
Rev. 11-2017 Page 8
i. Certify to CHFA that based upon its subsequent investigation, it has no
reasonable grounds for believing that the borrower did not meet the
requirements of (Section 3.1D). Such certification shall be made on the
Participating Lender Certification; or
ii. Promptly notify CHFA in the event it determines that these requirements
have not been complied with and take such action with respect to the
Mortgage Loan as CHFA shall thereafter request, which may include
requiring the Participating Lender to repurchase the Mortgage Loan
pursuant to (Section 7.2C) of this manual.
E. Mortgage Requirement
Mortgage Loans may be made only to persons who did not have a mortgage
(whether or not paid off) on the Eligible Dwelling at any time prior to the execution
of the Mortgage. A Mortgage Loan may not be made to finance the purchase of a
remaining interest in a home in which a partial interest is already owned or will be
acquired through inheritance or gift. Mortgage Loan proceeds may not be used to
acquire or replace an existing mortgage or debt for which the Eligible Borrower is
liable or which was incurred on behalf of the Eligible Borrower, or provide
financing for a property which is debt free, except for:
A construction loan; or
Temporary financing which has a term of twenty-four months or less; or
A mortgage on unimproved land on which a dwelling is to be constructed,
as long as the mortgage is satisfied prior to the date of the Loan closing and
the amount of the Loan does not exceed the cost of construction; or
A Rehabilitation Mortgage 203(k) Limited Program (Section 4).
1. Definition of Mortgage
For purposes of applying the mortgage requirements, a mortgage includes a deed of
trust, a conditional sales contract, a pledge, an agreement to hold title in escrow, a
lease with an option to purchase which is treated as an installment sale for Federal
income tax purposes and any other form of owner financing. A conditional land
sale contract shall be considered as an existing loan or mortgage for purposes of this
requirement.
2. Temporary Financing
In the case of a Mortgage Loan made to refinance a loan for the construction of an
Eligible Dwelling, the Participating Lender must certify to CHFA that such
construction has been satisfactorily completed prior to submission of such
Mortgage Loan for purchase by CHFA. Such certification shall be made on the
Participating Lender Certification.
Rev. 11-2017 Page 9
3. Review by Participating Lender
a. Prior to closing the Mortgage Loan, the Participating Lender must examine the
Borrower Certificate and related submissions, including (i) the Eligible
Borrower’s Federal Income Tax Returns and (ii) current credit report, in order
to determine whether the Eligible Borrower has met the mortgage requirements
or whether such examination discloses any existing mortgage or debt which the
proceeds of the CHFA Loan may be used to repay or refinance. Upon such
review, the Participating Lender shall certify to CHFA that the Lender has no
reasonable grounds for believing that the Mortgage Loan proceeds will be used
to repay or refinance an existing mortgage debt. Such certification shall be made
on the Participating Lender Certification.
b. Subsequent to the closing of the Mortgage Loan, should the Participating
Lender find that the Eligible Borrower is repaying or refinancing an existing
mortgage or debt with the proceeds of the Mortgage Loan, other than temporary
initial financing having a term of twenty-four months or less, the Participating
Lender shall promptly notify CHFA and take such action with respect to the
Mortgage Loan as CHFA shall thereafter request. CHFA may require the
Participating Lender to repurchase the Mortgage Loan pursuant to (Section
7.2.C) of this Manual.
F. Determination by Participating Lender
The qualification of an Eligible Borrower shall be determined by the Participating
Lender subject to review by CHFA. For each application, the Participating Lender
must review the application form and related submissions to determine their
consistency, completeness, and compliance with the terms of this Manual. Lender
is required to verify the information provided to them, either independently or
concurrently with credit reviews, when applicable.
G. Multiple Loans
An Eligible Borrower may not have more than one outstanding CHFA Mortgage
Loan including a CHFA Loan that has been assumed by another person.
3.2 Eligible Dwellings
A. General
In order to qualify as an Eligible Dwelling for which a Loan may be made, the
premises must:
1. Be located in the State of Connecticut;
Rev. 11-2017 Page 10
2. Be structurally sound and functionally adequate and meets all applicable
zoning requirements, housing codes and similar requirements;
3. Have a permanent certificate of occupancy if newly-constructed or
substantially rehabilitated or when a certificate of occupancy is not obtainable
in the case of substantial rehabilitation, have such other documentation as
CHFA may require;
4. Meet all appropriate requirements listed in (Section 3.2.B).
B. Types of Dwellings
An Eligible Dwelling may be a one to four family residence (including all fixtures
and land on which it is situated) or a unit of an approved/eligible condominium or
planned unit development. In the case of a two to four family residence, at least
one of the units must be Owner-Occupied and the building must have been used
as a residence for at least five years preceding the application for the Loan. A
newly-constructed two family home located in a Targeted Area may also be
eligible.
C. Principal Residence Requirement; Owner-Occupancy
1. In order to be considered an Eligible Dwelling, the residence must become the
permanent principal residence of the Eligible Borrower within 60 days after
the closing date of the Mortgage Loan. The requirement of this section will
not be satisfied where the residence (which shall include any land financed by
a Loan) can reasonably be expected to be used in a trade or business (except
for certain two-to-four family residences), as investment property, or as a
recreational second home.
2. The Participating Lender shall be responsible for determining whether the
dwelling is in a condition which will satisfy the principal residence
requirement, subject to review by CHFA. In making this determination the
Participating Lender may not rely solely upon statements made by the Loan
applicant in the Borrower Certificate, but must verify compliance with this
requirement by conducting an on-site inspection of the dwelling (the
appraisal) and through other reasonable efforts. On the basis of such
independent investigation, taking into account the location, structural and
other characteristics of the dwelling, the Participating Lender shall certify to
CHFA, that based upon reasonable belief and independent investigation, the
dwelling is expected to be suitable for occupancy as a principal residence by
the Loan applicant within 60 days after the closing of the Mortgage Loan and
is not expected to be used in a trade or business, as an investment property or
as a recreational or second home.
Rev. 11-2017 Page 11
D. Principal Residence Requirements Pertaining to Land
1. Lot Size
The land on which the eligible dwelling is situated cannot exceed basic
livability, other than incidentally, cannot be subdivided, and cannot be a source
of income to the borrower.
2. Non-production of Income
a. Only land which does not provide a source of income to the Eligible
Borrower (other than incidental income) may be financed by a Mortgage
loan.
b. The Participating Lender is required to conduct an on-site inspection of the
property (the appraisal) and to certify to CHFA that on the grounds of that
inspection and other reasonable grounds, the Lender expects that the property
will not be used to produce income to the Eligible Borrower, other than
incidental income.
3. Leasehold Interests
The following requirements shall apply where a Loan is secured by a mortgage
on a leasehold interest:
a. The notice of lease must be recorded on the land records of the town in
which the property is located;
b. The term of the lease must be equal to the number of years remaining until
the maturity date of the loan and in no instances may the lease expire before
the maturity date of the loan is reached.
Example: If the amortization term of the mortgage loan is for 30 years (360 months)
beginning on July 30, 2010 ending on July 30, 2040, the term of the lease must be for at
least 30 years (360 months) concurrent with the mortgage loan and may not expire prior
to July 30, 2040.
c. The lease shall be in full force and effect and subject to no change or penalty
or prior lien or encumbrance by which it can be terminated; and
d. The lease must be on a form acceptable to CHFA; it shall provide that the
lessee may mortgage the leasehold estate, and it must not contain conditions
under which the leasehold may be terminated for lessee’s default without the
mortgagee having the right to receive from the lessor written notice of, and
reasonable opportunity to cure, such default.
Rev. 11-2017 Page 12
E. Sales Price Requirements
1. The Acquisition Cost of an Eligible Dwelling may not exceed the sales price
limits established by CHFA and in effect at the time of the application.
Appraised value as well as actual selling price will be reviewed by CHFA on
all Loan submissions. Any indirect or non-pecuniary consideration will be
given effect in determining the market value. CHFA may at its option reject
an application for a Mortgage Loan where the appraised value exceeds the
applicable CHFA Sales Price Limit by more than five (5) percent.
2. Arm’s-Length Transaction
In those cases that are not arm’s length transactions the appraised value may
not exceed the applicable sales price limit.
3. Definition of Acquisition Cost
Acquisition Cost means the cost of acquiring the Eligible Dwelling from the
Seller as a completed residence. In determining Acquisition Cost:
a. Acquisition Cost includes:
i. All amounts paid, either in cash or in kind, by the Eligible
Borrower (or a related party for the benefit of the Eligible
Borrower) to the Seller (or a related party or for the benefit of the
Seller) as consideration for the Eligible Dwelling. Such amounts
include amounts paid for items constituting fixtures under State
law, but not for items of personal property not constituting fixtures
under State law.
ii. The reasonable costs of completing the residence, whether or not
the cost of completing construction is to be financed with the
Mortgage Loan, if the Eligible Dwelling is incomplete. As an
example of reasonable completion cost, costs of completing the
Eligible Dwelling so as to permit occupancy under local law would
be included in the Acquisitions Costs.
iii. The capitalized value of the ground rent calculated using a
discount rate equal to the yield on the CHFA bonds from which the
Mortgage Loan was made, where the Eligible Dwelling is subject
to a ground rent. CHFA will supply bond yield information to
Participating Lenders on request for the purpose of calculating
capitalized ground rent.
Rev. 11-2017 Page 13
iv. The cost of land which has been owned by the Eligible Borrower
prior to the construction of the structure comprising the Eligible
Dwelling.
b. Acquisition Cost does not include:
i. Usual and reasonable settlement or financing costs. Such settlement
costs include title and transfer costs, title insurance, survey fees
and other similar costs. Such excluded financing costs include:
credit reference fees
legal fees
appraisal expenses
points which are paid by the Eligible Borrower (not by the
seller), or other costs of financing the residence.
Such amounts must not exceed the usual and reasonable costs
which otherwise would be paid. Where the buyer pays more than a
pro rata share of property taxes, for example, the excess is to be
treated as part of Acquisition Cost.
ii. The imputed value of services performed by the Eligible Borrower
or members of his family (brothers and sisters, spouse, ancestors
and lineal descendants) in constructing or completing the
residence.
c. The following examples illustrate determination of Acquisition Costs:
Example (1)
A contracts with B, a builder of single family residences, for the purchase of a
residence. Under the terms of the contract, B will deliver a residential unit to A
that contains an uncompleted recreation room and an unfinished third floor and
lacks a garage.
Normally, a completed recreation room, a finished third floor and a garage are
provided as part of the residence by B.
The contract price for the residence is $158,000. At the same time, A contracts
with C, an affiliate of B, to complete the recreation room, the third floor and to
construct the garage for a contract price of $25,000.
C will perform this work after A receives title to the unit from B. The
Acquisition Cost of A’s completed residential unit is $183,000 which represents
the contract price plus the cost of completion of the recreation room, third floor
and construction of the garage.
Rev. 11-2017 Page 14
Acquisition Cost Example (1)
$ 158,000.00 – contract price (excludes completion of 3rd
fl, recreation room or garage)
$ 25,000.00 – cost of completion of 3rd
fl, recreation room and garage
$183,000.00 – Acquisition Cost
Example (2)
E owns a single family residence which has been listed for sale. D contracts to
purchase E’s residence, and the contract provides for a selling price of
$100,000. D also agrees to pay an unsecured debt in the amount of $15,000,
which E owes to X, a local bank. D further agrees to purchase from E the
refrigerator, stove, and dryer located in E’s residence for $2,500, an amount
equal to the fair market value of such items. D also agrees to purchase the light
fixtures, curtain rods, and wall-to-wall carpeting for a fair market value price of
$1,000. The acquisition cost of D’s completed residential unit is $116,000.
Such amount includes the $15,000 unsecured debt paid off by D.
The $2,500 paid for the refrigerator, stove, washer, and dryer are not included
because such items are not included within the definition of an Eligible
Dwelling under the Program. Such definition does include the light fixtures,
curtain rods, and wall-to-wall carpeting purchased by D.
Acquisition Cost Example (2)
$100,000.00 – contract sales price for the property
$ 15,000.00 – borrower unsecured debt to the bank paid by seller
$ 1,000.00 – light fixtures, curtain rods, and wall-to-wall carpeting –allowable costs
$116,000.00 – Acquisition Cost
(Note: refrigerator, stove, washer and dryer are not allowable cost for this transaction)
Example (3)
F contracts with G to purchase G’s home for $100,000. After purchasing the
residence, F pays $3,000 to a party unrelated to G for painting, minor repairs,
and refinishing the floors. The Acquisition Cost of the residence is $100,000.
Such fix-up expenses are not treated as part of the Acquisition Cost. If G had
incurred such fix-up expenses by the amounts expended by F however, F may
not reduce his Acquisition Cost of the residence by such amounts.
Acquisition Cost Example (3)
$100,000.00 – contract sales price for the property
$ 00.00 – additional allowable cost for fix-up
$100,000.00 – Acquisition Cost
(Note: $3,000 costs to borrower to fix up property are not eligible cost for this transaction)
Rev. 11-2017 Page 15
4. Appraisals
A complete property appraisal report is required to be submitted by the
Participating Lender with each Loan submission except in the case of a loan
eligible for the Compliance Limited Documentation Program which requires
submission of only the first four (4) pages. Appraisals are required for all
Loan submissions for purchases of units in eligible condominium projects for
verification of current investor ratio concentration. All appraisals for
Mortgage Loans must be made by appraisers who are licensed or certified by
the State of Connecticut, acceptable to CHFA and as per FNMA Guidelines.
Participating Lenders must adhere to the Appraiser Independence
Requirements as outlined in the FNMA Selling Guide.
a. Forms - The report must be prepared on a current FNMA/FHLMC
appraisal form or on the appropriate FHA form which meets the
minimum HUD requirements, including any additional attachments or
addenda necessary to provide an adequately supported opinion of
market value.
b. Appraised Value - Appraisals should report the highest price which the
property will bring contemplating;
(i) The consummation of a sale and the transfer of title from a
seller to buyer who are participating in a bona-fide, arm’s-
length transaction and are motivated by no more than the
goals of typical participants;
(ii) Both parties are well informed or well advised and act
prudently, each for what he considers his own best interest;
(iii) Reasonable exposure is given to the property in the open
market;
(vi) Payment is made in cash or on terms reasonably equivalent
to cash, assuming typical financing terms are available in
the community for similar property.
c. Repairs - CHFA requires all mortgaged properties to be in good repair.
Appraisal reports shall indicate whether a building code inspection is
necessary. If the appraisal report indicates that repairs are needed, a
recertification by the appraiser must be obtained prior to the closing of
the Loan. The certification must provide the Eligible Borrower’s name
and the property address and must state that the property has been
inspected and the indicated repairs have been completed except in the
case in which an escrow has been established for such repairs. (See
203(k) Standard or 203(k) Limited Programs – Section 4).
Rev. 11-2017 Page 16
d. Exterior Photographs – Clear, descriptive photographs showing the
front, back, and a street scene of the subject property and the front of
each comparable. The subject and all comparables must be
appropriately identified.
e. Interior Photographs – At a minimum, the appraisal report must include
photographs of the following:
The kitchen
All bathrooms
Main living area
Examples of physical deterioration, if present; and
Examples of recent updates, such as restoration, remodeling, and
renovation, if present.
(FNMA Selling Guide B4-1.2-01)
f. The validity period for all appraisals on existing and proposed and
under construction properties will be 4 months. Appraisals may not be
more than 4 months old from the loan closing date to the date the loan
is sold to FNMA (See FNMA announcement 09-19)
g. UCDP – Must obtain and provide a “successful” SSR report for loans
delivered to FNMA (uninsured- HFA Preferred Programs). (FNMA
Selling Guide B4-1.1-06)
5. Review by Participating Lender
The Participating Lender shall determine that the Acquisition Cost of the
Eligible Dwelling does not exceed the applicable Sales Price Limit in
accordance with (Section 3.2.E). The participating Lender shall certify to CHFA
that the Sales Price requirement is met. Such certification shall be made on the
Participating Lender Certification.
6. Independent Appraisal
CHFA reserves the right to obtain an independent appraisal in order to establish
fair market value and to determine whether a dwelling is eligible for the
Mortgage Loan requested.
7. Surveys
A survey is not required if not required by FHA, VA, USDA-RD, FNMA or
PMI, and is not indicated by a prudent practice and custom in the geographical
area in which the property is located. However, CHFA reserves the right to
require a survey.
Rev. 11-2017 Page 17
F. Condominium and Planned Unit Developments
An individual condominium unit or unit of an approved planned unit development is
included within the definition of an Eligible Dwelling provided the requirements set forth
in this section and elsewhere in this Manual are met.
1. Condominiums
a. CHFA loans are available to finance the acquisition of any unit in the
following classes of condominium units:
i. Any unit not part of a conversion condominium, or
ii. Any unit in a conversion condominium, except that for a period of one
year subsequent to the filing of the declaration of the condominium,
CHFA may provide mortgage loan financing only to an applicant who
is a tenant that has rented a unit at the property.
b. Prior Approval of Condominium - Mortgage Loan submissions for
individual units in condominium projects are required to be approved by
FHA and placed on their approved condominium list. Loans under the HFA
Preferred Program must meet FNMA condominium eligibility requirements.
i. CHFA Mortgage Loan applications submitted for Commitment
must include a copy of the FHA connection condominium approval.
ii. The Lender must certify the condominium unit meets all Fannie
Mae (FNMA) condominium eligibility criteria and is eligible for
CHFA first mortgage loan financing.
iii. Lender must provide Fannie Mae (FNMA) Condominium Eligibility
Certification (CHFA form 013-490) or FNMA Condominium Project
Manager and include the document in the loan package submitted to
CHFA for review.
c. Deed Restricted Condominium Projects– Affordable Housing Condominium
Projects that are deed restricted for purchase to First-time
homebuyers or that have low - to - moderate income eligibility or low-
to-moderate income resale restrictions and are not eligible for FHA
or FNMA approval may be submitted to CHFA for review. A Request for
approval by CHFA shall be in writing and shall include the following:
i. The current public offering statement of the declarant;
Rev. 11-2017 Page 18
ii. The declaration of condominium, including the by-laws of the unit
owners’ association, survey, floor plans and all exhibits and schedules;
iii. Statistics on the number of units conveyed and the number of
unconveyed units that are vacant;
iv. The current fiscal year operating budget;
v. Documentation of the Association reserves process, status of reserves
accounts which must show a minimum of two months cushion for
monthly operating expenses;
vi. CHFA mortgage loan financing for individual units in Affordable Deed
Restricted Projects that are ineligible for FHA, VA, USDA-RD or PMI
insurance coverage may also require a minimum 20% down-payment
investment from an acceptable source which can include CHFA
approved non-profit, municipal, or Federal programs, or a combination
that includes an investment of the borrower’s own funds;
vii. Certificate of Insurance (current) including declaration page;
viii. Condo Eligibility Certification (CHFA Form #013-490);
ix. Photo of one condo unit;
x. Owner occupancy ratio;
xi. Total number of units in complex.
d. Maximum Units Financed
CHFA will not issue Commitments which would cause CHFA to hold Mortgage
Loans on more than fifty percent (50%) of the units in any one project; whether
existing or new construction, fifty percent (50%) of the units in the project must
be sold or under bona fide contracts of sale prior to CHFA’s purchase of any
condominium Loan.
e. Underwriting Considerations
Underwriting must include the unit owners’ association charges (excluding
heat) as fixed monthly costs when making underwriting calculations under
(Section 5.1.D).
Rev. 11-2017 Page 19
f. Necessary Papers and Documents
i. The CHFA Uniform Mortgage Rider together with a condominium rider,
on the appropriate form for a VA, FHA or PMI insured or guaranteed
Loan must be executed and recorded with the mortgage deed.
ii. The following documents, as applicable, must be submitted at each
closing:
a) Duly executed corporate consent authorizing sale of the unit, if the
grantor is a corporation; and
b) Certificate of payment of assessments for the individual
condominium unit.
2. Planned Unit Developments
CHFA considers a PUD or planned community, other than one consisting of
detached single family houses, on the same basis as a condominium.
G. Energy Efficiency Requirements for Newly-Constructed Houses
The sales contract (or specifications) for houses on which construction commences
after November 1, 1982 must provide for insulation of at least R30 in the ceiling and
R11 in the walls (R38 in the ceiling and R19 in the walls and floors in the case of
electric heat) and for double-glazed windows with wood or other thermal break (or
storm windows in lieu thereof). If necessary, an amendment to the sales contract to
provide these will be required.
H. Determination by Participating Lender
The eligibility of a dwelling for CHFA financing shall be determined by the
Participating Lender subject to review by CHFA. For each application, the
Participating Lender must review the application form and related submissions to
determine their consistency, completeness and compliance with the requirements of
this Manual. Lender is required to verify the information provided to them, either
independently or concurrently with the application.
Rev. 4-2016 Page 1
SECTION 4 – REHABILITATION MORTGAGES 203(k) Standard & 203(k) Limited
4.1 Program Descriptions
4.2 Borrower Eligibility
4.3 Property Eligibility
4.4 Principal Residence Requirement
4.5 Rehabilitation Loan Amounts and Eligible Repairs
4.6 Builders and Contractors
4.7 Contracts and Rehabilitation Work Specifications
4.8 Completion of Work and Construction Period
4.9 Post-Closing Inspection
4.10 Rehabilitation Escrow Account
4.11 Additional Documentation
4.12 Origination Fee and Closing Costs
Rev. 4-2016 Page 2
Section 4 - Rehabilitation Mortgages
203(k) Standard & 203(k) Limited Programs
4.1 Program Descriptions
Overview
The FHA 203(k) Standard and 203(k) Limited Rehabilitation Mortgage Loan Programs
offer first mortgage financing for prospective homebuyers interested in purchasing a
home that needs repairs. These programs may be used to purchase and rehabilitate
existing 1-4 unit dwellings (manufactured homes are not eligible) and include, as part of
the acquisition cost, the cost of rehabilitating the property as a completed residential unit.
Homebuyers interested in purchasing and repairing a home under this program generally
may not have owned a home in the last three years to qualify; but previous homeowners
may qualify if they intend to purchase and occupy a home located in a federally targeted
area.
The FHA 203(k) Standard and 203(k) Limited Rehabilitation Mortgage Loan Programs
are available to FHA lenders that are approved by CHFA to originate under this program.
A HUD approved Consultants report is required with all 203(k) Standard Rehabilitation
Mortgage Loan Program submissions.
4.2 Borrower Eligibility
Borrower(s) eligibility, including Income and Sales Price Limits, are the same as for
CHFA Homebuyer Mortgage Program Loans, and are covered in Section 3 of this
Manual.
There are no income limits for FHA 203(k) Standard and 203(k) Limited Rehabilitation
Mortgage Loan Programs if purchasing in a federally targeted area, unless the applicant
also borrows under the Downpayment Assistance Program.
FHA 203(k) Standard and 203(k) Limited Rehabilitation Mortgage Loan Programs utilize
the Sales Price Limits as the limit for the total acquisition cost (purchase price plus total
rehabilitation costs) and as a final value guide for program eligibility.
All other guidelines for FHA 203(k) Standard and 203(k) Limited Rehabilitation
Mortgage Loan Programs are the same as for CHFA Homebuyer Mortgage Program
Loans, except for specific items covered in this Section.
Rev. 4-2016 Page 3
4.3 Property Eligibility
The FHA 203(k) Standard and 203(k) Limited require Borrower(s) to purchase homes
that meet specific property and sales price guidelines. The property must meet one of the
definitions listed below:
a. Existing 1-4 Family Residential Property
b. FHA approved condominium and PUD- (FHA restrictions apply)
c. Existing dwelling conversions up to four units
d. No Manufactured Housing, Mobile Homes or Co-Ops
In order to qualify for these programs, the Borrower(s) must use the loan to purchase and
repair a home which they will occupy as their principal residence within six (6) months
of loan closing including rehabilitation period.
The Borrower(s) may not use the loan to purchase recreational, vacation, investment,
commercial or rental properties (unless the Borrower(s) is an owner-occupant of an
eligible multi-family residence up to a maximum of 4 units).
A loan under this program will cover the cost of converting commercial property to
residential property. No part of the purchased property may be designated for
commercial purposes. Owner-occupant Borrower(s) only; no investors.
4.4 Principal Residence Requirement
In order to qualify for these programs, the Eligible Borrower(s) must use the loan to
purchase and repair a home in which they will occupy as their principal residence.
Eligible Borrower(s) shall covenant to occupy the Eligible Dwelling as their principal
residence within sixty (60) days of Loan closing.
Unless the residence can reasonably be expected to become the principal residence of the
Eligible Borrower(s) within six (6) months, the residence will not be considered an
Eligible Dwelling and therefore may not be financed with a FHA 203(k) Standard or
203(k) Limited Rehabilitation Mortgage Loan.
Rev. 4-2016 Page 4
4.5 Rehabilitation Loan Amounts and Eligible Repairs
1. The FHA 203(k) Standard Rehabilitation Mortgage Loan Program, as listed in the
U.S. Department of Housing and Urban Development (HUD) website, will allow
Borrower(s) to purchase a house in need of full structural alterations or repairs and
modernization that includes both the cost of acquisition and rehabilitation. The
maximum mortgage amount cannot exceed the applicable loan-to-value ratio and
maximum dollar amount limitation prescribed for the FHA Maximum Mortgage
Limits as applicable for where the home is located.
The types of improvements that Borrower(s) may make using the FHA 203(k)
Standard Rehabilitation Mortgage Loan Program include these examples:
a. Structural alterations and repair of damage to the home including chimneys,
walls, roofs, and ceilings, termite and water damage.
b. Installation of energy-efficient features to plumbing, heating and electrical
devices.
c. Installation or replacement of wells, septic tanks, windows and hot water
systems.
d. Repair of flooring, roofing, handrails, downspouts and exterior siding that
improves the general livability of the home.
e. Alterations to enable handicap accessibility.
2. The FHA 203(k) Limited Rehabilitation Mortgage Loan Program, as listed in the
U.S. Department of Housing and Urban Development (HUD) website, is a limited
repair program that will allow Borrower(s) to obtain a mortgage loan that includes the
cost of acquisition and up to an additional $35,000 that can be used to complete
moderate rehabilitation or modernization repairs to the property prior to moving in.
The maximum mortgage amount cannot exceed the applicable loan-to-value ratio and
maximum dollar amount limitation prescribed for the FHA Maximum Mortgage
Limits as applicable for where the home is located.
The types of improvements that Borrower(s) may make using the FHA 203(k)
Limited Rehabilitation Mortgage Loan Program include these examples:
a. Basements, Decks, Patios, Floors
b. Electrical, HVAC Systems, Weatherization
c. Minor Remodel
d. New Appliances (up to $2,000)
e. Replacement Windows, Painting, Plumbing, Roofs
f. Septic & Well Repairs, Sewer Hook-up
Rev. 4-2016 Page 5
Properties that require the following work items are not eligible for financing under
the FHA 203(k) Limited Rehabilitation Mortgage Loan Program:
a. Major rehabilitation or major remodeling, such as the relocation of a load-
bearing wall;
b. New construction (including room additions);
c. Repair of structural damage;
d. Repairs requiring detailed drawing or architectural exhibits;
e. Landscaping or similar site amenity improvements;
f. Any repair or improvement requiring a work schedule longer than six (6)
months; or
g. Rehabilitation activities that require more than two (2) payments per
specialized contractor.
Borrower(s) may not use the FHA 203(k) Limited Rehabilitation Mortgage Loan
Program to finance any required repairs arising from the appraisal that do not appear
on FHA 203(k) Limited Rehabilitation eligible work items list or that would:
a. Necessitate a “consultant” to develop a “Specification of Repairs Write-Up”;
b. Require plans or architectural exhibits;
c. Require a plan reviewer;
d. Require more than six (6) months to complete;
e. Result in work not starting within 30 days after loan closing; or
f. Cause the Borrower(s) to be displaced from the property for more than fifteen
(15) days during the time the rehabilitation work is being conducted. (FHA
anticipates that, in a typical case, the Borrower(s) would be able to occupy the
property after mortgage loan closing).
4.6 Builders and Contractors
The Borrower(s) are required to have a construction contract with the Builder or General
Contractor. The Builder or General Contractor must be registered and / or licensed with
The State of Connecticut Department of Consumer Protection and carry appropriate
insurance. Builders and General Contractors should be reviewed by the Participating
Lender to determine experience and expertise.
Borrower(s) may not be the General Contractor for rehabilitation work being completed
on their owner-occupied, primary residence under this program.
4.7 Contracts and Rehabilitation Work Specifications
Borrower(s) are required to have a construction contract with the Builder or General
Contractor. All contracts must be in writing, including any subsequent changes and
modifications. Contracts must be specific for performance and materials and include a
schedule for completion and payment terms.
Rev. 4-2016 Page 6
a. The FHA 203(k) Limited Rehabilitation Mortgage Loan Program does not
mandate a contingency reserve be established. However, at the Participating
Lenders discretion a contingency reserve account up to 20% may be set up for
administering the Loan. Funds held back in contingency reserve must be used
solely to pay for the proposed repairs or improvements and any unforeseen items
related to these repair items. Any unspent funds remaining after the final work
item payment(s) is made, must be applied to the mortgage principal.
A HUD approved Consultants report is required with all 203(k) Standard
Rehabilitation Mortgage Loan Program submissions.
4.8 Completion of Work and Construction Period
The Participating Lender or its designee is responsible for monitoring the completion of
the work and managing the release of funds to pay for completed work and must exercise
all approval and oversight responsibilities that are customary and required to comply with
State laws and to ensure that clear title to the property is maintained. If any action taken
(or failed to be taken) in overseeing the rehabilitation work affects the ability to take clear
title to the property, CHFA may require the Participating Lender to repurchase the
mortgage.
The Participating Lender must maintain a copy of all of the documentation that supports
the rehabilitation work including but not limited to: plans and specifications; appraisals;
rehabilitation or construction contracts; title insurance updates and endorsements; etc. in
the individual mortgage file.
The following will also apply:
a. The Borrower(s) will agree to occupy and use the residential property for a
permanent principal residence. (FHA anticipates that, in a typical case, the
Borrower(s) would be able to occupy the property after mortgage loan
closing).
4.9 Post-Closing Inspection
a. Within 60 days after the FHA 203(k) Standard and 203(k) Limited Rehabilitation
Mortgage Loan escrow is totally disbursed but in no event later than 60 days after
the end of the construction time period, the Participating Lender is required to
inspect the eligible dwelling for:
1. No trade or business;
2. Owner-Occupancy as a permanent principal residence;
3. No prohibited use of land; and
4. Completion of rehabilitation.
Rev. 4-2016 Page 7
b. Based upon the above investigation, the Participating Lender shall either:
1. Certify to CHFA that based upon its subsequent investigation, the
Participating Lender has no reasonable grounds for believing that the
Borrower(s) did not meet the requirements of Sections 3.1D and the
Rehabilitation has been completed; or
2. Promptly notify CHFA in the event the Participating Lender determines
that these requirements have not been complied with and take such action
with respect to the FHA 203(k) Standard and 203 (k) Streamline
Rehabilitation Mortgage Loan as CHFA shall thereafter request. CHFA
may require the Participating Lender to repurchase the Rehabilitation
Mortgage Loan pursuant to Section 7.2.C.
4.10 Rehabilitation Escrow Account
At loan closing, the Attorney and Participating Lender will deposit all of the
rehabilitation costs into an interest-bearing escrow account. The Participating Lender or
its designee will be responsible for administering this account ensuring that the
rehabilitation is completed in a timely manner and in accordance with the plans and
specifications and the Contractors estimated bids. Interest earned on the escrow account,
less any administrative expenses involved in maintaining the account, must be paid or
credited to the Borrower(s).
An Escrow Agreement furnished by the Participating Lender will be signed at the closing
of the FHA 203(k) Standard and 203(k) Limited Rehabilitation Mortgage Loan whereby
the Borrower(s) and Participating Lender will agree as follows:
1. The Participating Lender or its designee will be custodian of the escrow account
and will treat these funds in the customary manner.
2. Funds from the escrow account will be disbursed by the Participating Lender or
its designee in amounts coinciding with the approved drawdown schedule, based
upon inspection of the construction.
3. Each progress payment will be disbursed to the Borrower(s) and made payable to
both the Borrower(s) and General Contractor or Builder.
4. Progress payments and final disbursement will be made only after lien waivers
have been obtained from the General Contractor and all subcontractors to whom
payment remains to be made and all building permits have been signed off by
appropriate authorities, when applicable.
Rev. 4-2016 Page 8
4.11 Additional Documentation
Unless otherwise stated, all documentation normally required for a CHFA Homebuyer
Mortgage Program Loan is required under the FHA 203(k) Standard and 203(k) Limited
Rehabilitation Mortgage Programs. Additional documentation required is as follows:
Documentation must be submitted in the Loan Submission Package to CHFA:
a. Copy of fully executed HUD Form 92700 203(k) Maximum Mortgage Worksheet
b. Copy of valid Contractor Licenses
c. Copy of current Contractor Liability Insurance Certificate
d. Copy of fully executed Rehabilitation work proposal(s) and contracts
4.12 Origination Fee and Closing Costs
The maximum allowable amount CHFA will allow a Participating Lender to collect on
the FHA 203(k) Standard and 203(k) Limited Rehabilitation Mortgage Loan Program
first mortgage loan transaction are listed below:
FHA 203(k) Standard Rehab Loan- Point fee = 2.50%
FHA 203(k) Limited Rehab Loan - Point fee = 1.50%
Supplemental Origination Fee – the greater of $350.00 or 1.50% of the cost of the
improvements. (see HUD Form 92700 for max.)
CHFA Loan Processing Fee = $395.00
CHFA Loan Underwriting Fee = $395.00
203(k) Loans with repair/upgrade costs < $35,000.00 must be reserved under the 203(k)
Limited Rehabilitation Program only; any exception will require prior approval from the
CHFA Underwriting Manager. 203(k) Limited Rehabilitation Mortgage Loans may not
be submitted as 203(k) Standard Rehabilitation Mortgage Loans to collect the higher
origination fee.
Rev. 7-2018 Page 1
SECTION 5 – UNDERWRITING (See Section 8 for DAP Underwriting)
5.1 Credit Review
5.2 Applicant Processing
5.3 Mortgage Insurance or Guaranty
5.4 Closing Costs
5.5 Loan Submission to CHFA for Commitment
5.6 Limited Documentation & Delegated Underwriting
Rev. 7-2018 Page 2
Section 5 – Underwriting
5.1 Credit Review
A. Evaluation
The Participating Lender is responsible for evaluating applicants for CHFA Loans.
Evaluation of creditworthiness must be done on a case-by-case basis, but standards for
determining income shall be applied to each applicant in the same manner.
B. Income
1. Aggregate borrower and/or co-borrower’s income (gross income) shall include
income from whatever source derived, including without limitation, regular
earnings; part-time earnings; unemployment compensation; bonuses; dividends;
interest (except on funds which will be used for downpayment and closing costs);
commissions; military allowances; welfare payments; disability payments;
pension, annuity, retirement and social security benefits; and reimbursement for
services in military reserve or National Guard. Overtime income, whether or not
guaranteed by an employer, shall be included unless of short duration and of a
temporary nature. Generally, unemployment compensation is not to be
considered as part of income in determining whether the borrower has the ability
to repay the Loan. CHFA reserves the right to consider unemployment
compensation as acceptable qualifying income when:
a. The borrower and/or co-borrower is employed in a seasonal occupation
and receives unemployment compensation in “off season” periods;
b. The borrower and/or co-borrower’s employer schedules mandatory
“shut- downs” or furloughs on a recurring basis and provides
unemployment compensation benefits to eligible employees;
VA educational benefits are not to be considered part of income in
determining whether the borrower has the ability to repay the loan.
2. Although the qualifying income for the CHFA income limits will be based solely on
the income of the borrower and/or co-borrower applicants, the family size, (1 or 2
persons; 3 or more) will determine the amount of income the borrower and/or co-
borrowers may earn to participate in the CHFA loan program, when applicable. In
order for an unborn child to be considered a member of the family in determining
the number of family members for income limit purposes, proof of pregnancy must
be provided to CHFA. A doctor’s certificate is sufficient proof. The prior
annualized income of the borrower and/or co-borrower must be included if they
have been employed during the ninety (90) days prior to the date of the application.
This requirement is not applicable if the date of termination of employment is fully
documented.
Rev. 7-2018 Page 3
3. In cases where the applicant is self-employed, or one of the principal owners of a
business, the applicant’s Schedule C from the applicant’s two most recent federal
income tax return or the business income tax return will be used, without
adjustment, to determine the income for purposes of eligibility. Self-employment
or investment losses and employee expenses on Form 2106 will not be reflected for
purposes of eligibility under (Section 3.1B), but will be reflected for qualifying
underwriting ratios.
4. CHFA will accept FHA, USDA-RD, VA or PMI guidelines for the percentage of
the fair market income from all rental units in an Eligible Dwelling of two to four
units to be included in total gross income for underwriting purposes. For loans with
20% or more in down payment, CHFA will accept 75% of the fair market rent for
underwriting purposes. In determining whether or not the applicant meets the
applicable CHFA income limit, the amount of income from the rental units will be
based on the percentage of the anticipated fair market income consistent with the
loan program, i.e. follow the guidelines of the insurer, FHA, VA, USDA-RD, PMI
or CHFA special program, when applicable. This total income must fall within the
applicable income limit established by CHFA, whether or not the mortgage is
insured by FHA, VA, USDA-RD or PMI. Prospective rental income from boarders
in a one-family Eligible Dwelling is not included in total gross income of the
applicant for underwriting purposes. Alimony, child support or maintenance
payments are to be included in income only to the extent that they are likely to be
consistently made. Factors which the Participating Lender should consider in
determining the likelihood of consistent payments include, but are not limited to:
Whether the payments are received pursuant to a written agreement or
court decree,
The length of time the payments have been received,
The regularity of receipt,
The availability of procedures to compel payment,
Whether full or partial payments have been made,
The age of the child, and
The creditworthiness of the borrower(s), including the credit history of the
borrower(s) where available to the Participating Lender under the Fair
Credit Reporting Act or other applicable laws; and
The participating Lender will submit to CHFA evidence adequate to
support its determination.
5. Income must be supported by copies of the borrower(s) federal income tax returns
in accordance with (Section 3.1C.4) and copies of the applicant(s) three most recent
pay stubs under (Section 5.1.B.1.) The prospective Eligible Borrower(s) must
demonstrate stability of income from all sources. Such wage and employment
verification shall be obtained from the applicant’s employer.
Rev. 7-2018 Page 4
C. Co-signors
Co-signors or guarantors are not permitted on a Loan.
D. Underwriting Ratios
1. Monthly Housing Expense-to-Income Ratio
On uninsured, FHA insured, and PMI-insured Loans CHFA will require the
monthly housing expense ratio (principal, interest, taxes, insurance, [PITI]
including payment on subordinate financing [down payment assistance loans other
than CHFA DAP], along with any other applicable housing expenses required to be
paid in accordance with the Loan terms) to be in compliance with the insurer and
investor guidelines. If the applicant is purchasing a condominium or Planned Unit
Development (PUD), the periodic condominium common charges i.e. Home Owner
Association or HOA fees or PUD fees to cover operating charges (excluding heat)
and maintenance costs and reserves must be included in the monthly housing
expense. When applicable, CHFA DAP underwriting guidelines will also apply.
2. Monthly Debt Payment-to-Income-Ratio
On uninsured, FHA-insured, and PMI-insured Loans, CHFA will require that the
total amount of monthly housing expense plus all other monthly payments on
installment loans, student loans, and revolving credit is 45% of the borrower(s)
gross monthly income. Alimony, child support and maintenance payments are to be
considered in this category. The USDA-RD-guaranteed and VA-guaranteed loans
maximum monthly housing debt-to-income ratio allowed, must be in compliance
with the insurers underwriting guidelines.
3. The Participating Lender must determine that the applicant(s) housing payments
plus other obligations do not constitute an undue strain on the applicant’s ability to
make all such payments promptly and that a good credit reputation is evidenced.
E. Credit Reports
CHFA requires all credit reports to be in a form acceptable to the mortgage insurers.
Additional credit information normally used by a Participating Lender in the
underwriting evaluation must also be submitted to CHFA for review with the loan
submission. In addition:
1. A history of slow payments on previous indebtedness must be satisfactorily
explained and the account(s) must be either paid current or paid in full.
Rev. 7-2018 Page 5
2. The Participating Lender must provide a satisfactory explanation for the
determination of creditworthiness for applicants with a credit history that reports
prior bankruptcy; foreclosure; short sale or deed-in-lieu delinquency.
3. Frequent changes in employment or residence within the past five years must be
explained satisfactorily.
F. Credit Scores
CHFA is not a “credit score” driven program. CHFA will accept applications from
borrower and/or co-borrowers for mortgage loan financing regardless of credit score,
with traditional or nontraditional credit references. Additional documentation may be
required when there is a history of slow payments, collections, judgments, charge-offs
or otherwise delinquent accounts.
Participating Lenders submitting Loan applications with FHA, USDA-RD, VA or PMI
insurance are required to follow the Credit Score Guidelines of the insurer and may not
submit a loan application to CHFA that is noncompliant with the insurer criteria. CHFA
may also require Lenders to comply with credit overlays of Secondary Market investor
program(s) for specific loan products. The Participating Lender will be required to
repurchase a loan if it is rejected by the insurer or the investor for noncompliance.
G. Delinquent Credit
The Participating Lender must follow the Automated Underwriting System (AUS) or
FHA Total-Scorecard findings regarding obtaining supporting documentation for prior
delinquent credit if required.
1. The payment history of all applicants (borrower and co-borrower) must be
examined for credit worthiness. Credit history must comply with all applicable
insurer, (i.e. FHA, VA, USDA or PMI) or investor (i.e. FNMA / FHLMC)
underwriting guidelines regarding the treatment of delinquent credit for loan
approval. (This is not applicable to the treatment of outstanding judgment accounts.
CHFA will continue to require all outstanding judgment accounts to be paid in full.)
2. CHFA will continue to require payoff of all outstanding judgment accounts
without exception.
3. Eligible borrowers with Bankruptcy discharged, Foreclosure, Short-Sale or Deed-
in-Lieu must meet applicable insurer (i.e. FHA, VA, USDA or PMI) or investor
(i.e. FNMA/FHLMC) guidelines. (This does not apply to loans submitted with
applications for CHFA Downpayment Assistance Program (DAP) loan financing. See
CHFA Operating Manual Section 8 – Downpayment Assistance Program for details.)
4. All outstanding tax liens must be paid in full regardless of any established
repayment arrangements in force at the time of the application.
Rev. 7-2018 Page 6
H. Debt Ratios
Monthly housing and total debt ratios must be in compliance with the insurer and investor
guidelines (i.e. VA, USDA- RD, PMI, FHLMC-HFA Advantage) up to a maximum of
45%. (FHA & FNMA-HFA Preferred Program) without DAP, can go up to a maximum
of 50%.
All loans with CHFA DAP must meet DAP ratio guidelines of 35% / 43%.
I. Secondary Market (Fannie Mae) – Underwriting DU
The first submission to DU for underwriting purposes must occur before closing of the
mortgage loan. When the loan or borrower information changes and it no longer matches
the information used when the file was last underwritten with DU, the lender must update
the data and resubmit. Exceptions are specified in FNMA Selling Guide section B3-2-09,
Accuracy of DU Data, DU Tolerances, and Errors in the Credit Report.
When the loan file is resubmitted to DU after closing and prior to delivery, the lender is
responsible for ensuring that:
a. All information provided in the final submission to DU matches the terms
of the closed loan;
b. The loan complies with the requirements specified in FNMA Selling
Guide section A2-2.1-04, Limited Waiver of Contractual Warranties for
Mortgages Submitted to DU;
c. The loan delivery data matches both the closed loan and the final data
submitted to DU; and
d. The loan file receives an eligible recommendation from DU on the final
submission.
The DU Underwriting Findings report summarizes the overall underwriting
recommendations and lists the steps necessary for the lender to complete the processing
of the loan file. This report is described in FNMA Selling Guide section B3-2-10, DU
Underwriting Findings Report.
J. Gift Letters
In the event that a borrower uses gift monies to meet all or part of the down payment
requirement for a Loan, a gift letter containing FNMA documentation requirements or a
substantially similar form, must be submitted with supporting documentation in the
Loan submission package. (See FNMA Selling Guide, B3-4.3-04, Personal Gifts)
Rev. 7-2018 Page 7
K. Age of Documents
Participating Lenders are responsible for ensuring the age of the appraisal and credit
documents are in compliance with Secondary Market and Mortgage Insurer guidelines
at the time of the loan closing.
1. HUD Appraisal Validity Period – effective January 1, 2010
The validity period for all appraisals on existing and proposed and under
construction properties is 120 days. (See HUD Mortgagee Letter 2009-30)
2. HUD Age of Mortgage Loan Application Documentation
At the time that the loan closes, all documents in the mortgage application may be
up to 120 days old, or 180 days for new construction unless a different timeframe
is specified by HUD. (See HUD Handbook 4155.2.3.C.2.d)
Mortgage Loan Application Documentation includes:
Credit Report(s)
Employment Information
Income information
Asset Documentation
3. Secondary Market (Fannie Mae) Appraisal Validity Period
Properties must be appraised within the 12 months that precede the date of the
note and mortgage.
When an appraisal report will be more than four (4) months old on the date the
note and mortgage are executed, regardless of whether the property was appraised
as proposed or existing construction, the appraiser must inspect the exterior of the
property and review current market data to determine whether the property has
declined in value since the date of the original appraisal. This inspection and
results of the analysis must be reported on the Appraisal Update and/or
Completion Report -FNMA Form 1004D. (See Fannie Mae Selling Guide B4-1.2-02).
4. Secondary Market (Fannie Mae) Age of Credit Documents
The maximum age of credit documents is no more than four (4) months old on the
date the note is signed for all mortgage loans (existing and new construction).
(See Fannie Mae Announcement SEL 2013-4)
CHFA loans with Private Mortgage Insurance (PMI) will be required to meet the
minimum Fannie Mae requirements referenced above.
Rev. 7-2018 Page 8
NOTE: CHFA loans committed for purchase that do not close within the documentation
expiration periods will require the Participating Lender to update and/or recertify documents
as needed. Substantial changes in the integrity of a loan application, including deterioration of
credit history, loss of income, increase in debt ratios must be reported to CHFA. CHFA
reserves the right to re-underwrite the application at its discretion.
L. Equal Opportunity for CHFA Loans
All financing for which funds are provided by CHFA shall be open to all persons,
regardless of race, color, creed, national origin and ancestry, religion, sex, marital
status, physical or mental disability.
5.2 Applicant Processing
A. Forms
Applications for Loans must be submitted on the current standard FHLMC/FNMA
form or on the current FHA or VA form where applicable.
B. Location of Property Determines Income and Sales Price Limit
CHFA’s income limits and sales price limits must be applied according to the town in
which the property is located. (Special programs may follow statewide income limits)
C. Records of Declined Applications
Participating Lenders should maintain accurate records and related forms for each Loan
application that is declined. If any such records are requested by CHFA, they must be
delivered promptly.
5.3 Mortgage Insurance or Guaranty
A. Unless an applicant is making a 20% down payment towards the purchase of a
property, CHFA requires mortgage insurance on the property and the Lenders are
required to follow the guidelines of the insurer i.e. FHA, VA, USDA-RD or PMI.
Mortgage insurance is not required or allowed on loans with LTV’s less than or
equal to 80%.
B. Each Loan application submitted for commitment to CHFA by a Participating Lender
must be accompanied by a mortgage insurance or guaranty commitment unless the
downpayment (not borrowed) on the property is 20% or more, based on the lower of
the purchase price or property appraised value. CHFA independently reviews each
Loan application and in appropriate instances CHFA may decline to commit to
purchase loans despite earlier review and approval for insurance or guaranty by FHA,
USDA-RD, VA or PMI. CHFA will make a firm commitment to purchase only those
loans that satisfy the requirements of this Manual.
Rev. 7-2018 Page 9
C. Mortgage Insurance or Guaranty is required on all CHFA Loans with the exception of:
Private Mortgage Insurance (PMI) Eligibility
Loans for new construction single family properties and 1 – 2 family existing properties
located in CHFA designated Targeted Areas (or Targeted Census Tracts) where the
borrower is making a downpayment in an amount greater than or equal to 19.00% of
the contract sales price from an acceptable source of funds may be insured by Private
Mortgage Insurance. Acceptable source of funds include:
a. Borrower(s) own funds
b. CHFA / HUD approved nonprofit agency DAP or Grant Program
c. CHFA approved Government or Municipal DAP or Grant Program
Participating Lenders submitting applications for Loans on properties located in CHFA
Non-Targeted Areas that are not originated under the HFA Preferred or HFA
Advantage Program, will require FHA Insurance, VA or USDA-RD Guaranty
unless the loan application is originated in partnership with a CHFA approved
nonprofit, municipal or federal government homeownership program.
For loans originated in partnership with the CHFA Approved nonprofit, municipal or
federal government homeownership programs where acceptance of such insurance is a
requirement of the homeownership program provider, CHFA will allow FHA, VA,
USDA-RD or PMI insurance in both CHFA Non-Targeted and Targeted Areas (or
Targeted Census Tracts).
Loans on properties that are located in CHFA designated Targeted Areas (or Targeted
Census Tracts) are eligible for FHA, VA, USDA-RD or PMI insurance.
D. General Mortgage Insurance or Guaranty Considerations
The Participating Lender is responsible for ensuring the Borrower and/or Co-Borrower
obtains (and maintains in force) mortgage insurance or guaranty by a qualified insurer
or guarantor. The insurance or guaranty or a firm commitment therefore must be in
effect at the time CHFA purchases the Loan and CHFA must be named as the insured
or guaranteed mortgagee. The amount, terms and extent of coverage of the insurance
or guaranty shall be in accordance with the terms of this Manual.
E. Private Mortgage Insurance (PMI) Loans
1. Loans Which May Be PMI-Insured - CHFA will accept PMI insurance on:
Rev. 7-2018 Page 10
a. Loans originated under the Connecticut Housing Finance Authority (CHFA)
Fannie Mae (FNMA) HFA Preferred™ and Freddie Mac (FHLMC) HFA
Advantage® Products; See FNMA Selling Guide B7-1-02 - Mortgage
Insurance Coverage Requirements and Freddie Mac guidelines.
b. Loans originated in partnership with a CHFA Approved Affordable Housing
Program provider (these loans may also be uninsured if applicable to the
provider program criteria);
c. Loans originated under new product initiatives as authorized by the Board of
Directors.
2. CHFA Approved Affordable Housing Provider listing can be found on the loan
reservation screen within CHFA Loan Origination System.
3. Acceptable Insurers:
PMI Insurance is acceptable only from the following CHFA-approved companies which
meet Fannie Mae eligibility requirements:
a. Arch Mortgage Ins. Co. (CMG)
b. Essent Guaranty Inc. (Essent)
c. Genworth Mortgage Ins. Corp. (Genworth)
d. Mortgage Guaranty Insurance Corp. (MGIC)
e. National Mortgage Ins. Corp. (NMI)
f. Radian Guaranty Inc. (Radian)
g. United Guaranty Residential Ins. Co. (UGI)
4. Required Coverage:
The minimum insurance coverage required for CHFA HFA Preferred and HFA
Advantage loans is:
Loan-to-Value Ratio PMI Coverage Required
95.01% - 97.00% Top 18%
90.01% - 95.00% Top 16%
85.01% - 90.00% Top 12%
80.01% - 85.00% Top 6%
The minimum insurance coverage required for all other transactions as applicable:
Loan-to-Value Ratio PMI Coverage Required
95.01 – 96.50% Top 35%
90.01 – 95.00% Top 30%
80.01 – 90.00% Top 25%
Rev. 7-2018 Page 11
F. FHA Insured, USDA-RD and VA-Guaranteed Mortgage Loans
1. CHFA accepts FHA Insurance or USDA-RD and VA Guarantees new or existing
Eligible Dwellings.
2. Federal Programs - Each FHA, USDA-RD or VA Loan must be insured or
guaranteed under one of the following provisions of law:
a. FHA Section 203(k) Rehabilitation
b. FHA 213: Cooperative Financing
c. FHA Section 221(d) (2): Low and Moderate Income
d. FHA Section 222: Serviceman
e. FHA Section 233: Experimental Housing
f. FHA Section 234: Individual Condominium Unit
g. FHA Section 235: Lower Income (Interest Subsidy)
h. FHA Section 237: Special Credit Risks
i. FHA Section 245: Graduated Payment Mortgages
j. FHA Section 745: Direct Endorsements
k. FHA Section 809: Armed Services Civilian Employees
l. FHA Section 810: Armed Services Housing
m. USDA/Rural Development Section 502 Guaranteed Rural Housing Program
n. VA - Chapter 37 Title 38, U.S. Code (which includes Section 501 of the
Servicemen’s Readjustment Act of 1944, as amended)
o. Loans may be insured under any other FHA insurance program with the prior
approval of CHFA.
VA and RD- Guaranteed funding fees may be included in the first mortgage
loan financed by the Authority, providing the LTV does not exceed the guidelines of the
insurer.
3. In the case of a VA-guaranteed Loan, the Participating Lender must inform the
applying veteran of the restriction on the veteran’s ability to assign the Loan and
must obtain a Veteran’s Statement-Due on Sale (CHFA Form 018-0296), as required
by 36 CFR Section 36.4306(a) and (e). The Participating Lender must include the
signed consent statement with the application to CHFA.
G. Minimum Downpayment
1. FHA, USDA-RD, or VA insured loans will meet the minimum requirements of the
insurer (as described in Section 5.3D3 of this Manual). The minimum down
payment for *PMI must be equal to a minimum of 3.00% of the sales price.
2. Equity
In some cases CHFA may require a downpayment in excess of these minimums.
Examples include: requiring application of equity from the sale of residential
Rev. 7-2018 Page 12
property; requiring reduction of monthly payments on the Loan to a level consistent
with the Borrower’s ability to pay; or reducing the Loan to the maximum permitted
by the mortgage insurer or guarantor.
3. Maximum Mortgage Amount
In no event may the Loan amount exceed the lower of the purchase price or
appraised value.
H. Uninsured Loans and Insurance Coverage
1. Mortgage insurance coverage is required for all loans except for those loans with
a downpayment (not borrowed) of 20% or more and an LTV of 80% or less
based on the lower of cost or the appraised value. CHFA first mortgage loan
financing is available to borrowers whose downpayment is ≥ 20% state wide in
both Targeted and Non-Targeted Areas and census tracts.
2. Amount and Duration of Coverage
All mortgage insurance or guarantees by FHA must be maintained for the life of the
Loan. Private Mortgage Insurance for Single Family loans is subject to the
Homeowners Protection Act of 1998. Servicers will follow Fannie Mae guidelines
as applicable for one to four family properties as referenced in their Seller/Servicing
Guide. Applicable annual notices and disclosure requirements apply as mandated
by the Homeowners Protection Act of 1998 and termination of coverage as
applicable to loans closed on or after July 29, 1999 as outlined by the Act
regarding:
a. Borrower initiated cancellation of mortgage insurance;
b. Automatic termination of mortgage insurance;
c. Final termination of mortgage insurance coverage
Important Note: All loans with terminated Private Mortgage Insurance must be
reported to CHFA Finance Department on a monthly basis. Notification of
terminations should be sent to CHFA monthly by emailing [email protected].
3. Full Force and Effect
As of the closing date, mortgage insurance must be in full force and effect, the
benefits of such mortgage insurance must run to CHFA and nothing shall have
been done or omitted to impair the rights of CHFA thereunder.
4. No Commissions
A private mortgage insurer may not charge a commission, fee or other compensation
for providing mortgage insurance other than normal premiums.
Rev. 7-2018 Page 13
5.4 Closing Costs
A. Acceptable Closing Costs
Fees to be paid by the borrower must be reasonable and customary, including the
appraisal fee and any inspection fees, cost of credit reports, the origination fee,
processing fees, underwriting fees, home inspection fees, cost of title examination and
title insurance, attorney fees, recording fees, courier fees, taxes, certificate and test fees.
The maximum allowable amount CHFA will allow a Lender to collect on first
mortgage loan transactions for the origination fee, processing fee and underwriting fee
are listed below:
Loan Origination Fees = 0 point (0.00%); or 1 point (1.00%) as determined by
the applicant.
Loan Processing Fee = $395.00
Loan Underwriting Fee = $395.00
Document preparation fees may also be charged if performed by a third-party not
controlled by the lender. If charged, the document preparation fee may not exceed
$300.00. (See FHA Handbook 4155.1 REV-5 Settlement Requirement Section1-9A.)
B. Unacceptable Closing Costs - CHFA Eligible Borrowers may not be charged;
a. Commitment fee
b. Tax service fee (on any CHFA loan type, Government or Conventional)
c. Fees for guaranteeing the rate or points
d. Ineligible real estate broker fees
C. Seller Paid Closing Costs
Seller paid closing costs are permitted to the extent of the mortgage insurers’ (FHA,
VA, USDA-RD and PMI) and program guidelines (HFA Preferred). In the case of a
PMI-insured loan and an uninsured loan (20% downpayment), the total allowable seller
paid closing costs shall not exceed 6% of the purchase price.
5.5 Loan Submission to CHFA for Commitment
A. Exhibits for Commitment package
Please submit all documentation in the following descending order:
Rev. 7-2018 Page 14
a) STANDARD DOCUMENTS REQUIRED FOR ALL LOAN TYPES
a. Completed applicable CHFA servicer, Processing Checklist & Loan File
Submission Order form:
I. Idaho Housing and Finance Assoc. CHFA Form #009–1107A- Conventional
-or- CHFA Form #009-1107B Government - Processing Checklist & File
Submission Order Form, as applicable. - or -
II. AmeriNat CHFA Form #009-1108A Conventional -or- CHFA Form #009-
1108B Government - Processing Checklist & File Submission Order Form, as
applicable. (Service Retained Lenders must use CHFA Form #009-1108B for
Government loan file submissions).
b. The CHFA “Additional Data” screen within LOS must be completed and an
updated Uniform Residential Loan Application, FNMA Form 1003 must be
uploaded to the LOS portal for Loan submission. The loan package will be
counted as “arrived” and included for review only upon receipt of these
updated and completed items.
c. Documents Specific to the Insurer/Guarantor:
i. FHA Loans:
-HUD Form 92900 LT-Transmittal (FHA Direct Endorsement)
ii. VA Loans:
-VA Form 26-6393 Loan Analysis or Form 26-1866 Commitment
-Veterans Statement Re: Due on Sale (Orig. Signature -CHFA Form 018-0296)
iii. PMI Loans:
-FNMA Form 1008 (Uniform Underwriting and Transmittal Summary)
-Copy of PMI commitment
iv. USDA-RD Loans:
-FMHA 3555-18 Conditional Commitment
-FNMA Form 1008 (Uniform Underwriting and Transmittal Summary)
v. Uninsured:
-FNMA Form 1008 (Uniform Underwriting and Transmittal Summary)
d. Automated Underwriting Risk Status Printout (if available)
e. Uniform Residential Loan Application (FNMA Form 1003)
f. Credit Report
g. Verification of Income / Employment (or Alternative Documentation)
Rev. 7-2018 Page 15
h. Verification of Employment (VOE) and three most recent pay stubs or as an
alternative to obtaining a VOE, the lender may choose to submit all of the
following:
i. Original pay stubs covering the most recent 30-day period, which must at a
minimum clearly show the borrower’s name, social security number, and
year-to-date earnings; and
ii. Original copies of the previous two years’ W-2 forms. The “original” of the
W-2 may be any of the copies of the W-2 not submitted to the IRS with the
borrower’s income tax returns. These original documents may be
photocopied and returned to the borrower; and
iii. A verbal verification of employment for the past two years. The loan file
must include a certification from the lender that original documents were
examined and the name, title, and telephone number of the person from
whom employment was verified.
NOTE: If the employer will not give telephone confirmation of employment, or if the W-2
indicates inconsistencies (e.g. FICA payments not reflecting earnings), standard verification of
employment documentation must be used.
i. Pay stub(s) as required
j. Verification of Deposit (or Alternative Documentation). Verification of Deposit
(VOD) or as an alternative to obtaining a VOD, the lender may choose to
obtain from the borrower original bank statement(s) covering the most recent
three-month period.
DAP Loans: Lenders are required to document the source of funds for any
deposit or withdrawal in an amount that is equal to or greater than 10% of the
borrower’s monthly income.
Deposits or withdrawals that do not meet this threshold do not require
verification however; consistently scheduled deposits of smaller amounts may
require further discussion and documentation to ensure the funds are not coming
from an additional source of income i.e. part-time job or home based business
initiative.
k. Gift Letter (if applicable)
l. Signed Copies of Federal Income Tax Returns for 3 most recent years (only
one year if targeted area or targeted census tract)
Rev. 7-2018 Page 16
m. Signed Sales Contract
n. Amendment to Sales Contract re: Energy Efficiency Standards (if Single
Family new construction)
o. Appraisal Report and Photographs – Street View and Property
b) CHFA FORMS – Note: Original signature/initials required (CHFA will accept faxed
copies of original documents. Participating Lender must certify the faxes are true copies
of the originals)
a. CHFA Federal Recapture Tax Form (CHFA Form 051-0597)
b. IRS Form 4506-T or 8821 – Request for Copy or Transcript of Tax form or
Tax Information Authorization (request for 3 years, 1 year if Targeted Area)
c. Borrower Eligibility Certificate (CHFA Form 014-1107)
d. Homebuyer education is required for all CHFA loans. At least one borrower
must complete the class. A copy of the Counseling Certificate from a CHFA
HUD approved Counseling Agency is a required CHFA document.
c) PRODUCT-SPECIFIC FORMS
a. Rehab Loans
i. HUD Form 92700-203(k) Maximum Mtg Worksheet (203k Rehab loans only).
ii. Copy of Contractor’s current license.
iii. Copy of Rehabilitation Work write-up and signed contracts.
iv. Copy of Contractor’s valid Certificate of Liability insurance.
b. Homeownership Program Loans
i. Landlords Verification of Tenants address CHFA Form 060-1195 or Copy of
Lease or Recertification.
ii. Counseling Certificate of completion (from counseling agency)
c. Downpayment Assistance Program (DAP) Loans
i. CHFA DAP Loan Application & Qualification:
For loans requiring downpayment assistance - Form DAPappONLY;
ii. DAP Borrower’s Certificate - CHFA Form DAP95-05
Rev. 7-2018 Page 17
iii. TILA Loan Estimates (LE) 1st Mortgage and 2
nd Mortgage
iv. Counseling Certificate of completion (from counseling agency)
d. Teachers Mortgage Assistance Program
Teachers Statement of Eligibility – CHFA Form 031-030
e. Police Homeownership Program
Police Eligibility Letter – CHFA Form 031-027
f. Special Programs / Pilot Program Documentation
CHFA may require additional documentation specific to a Special Program or
Pilot Program initiative. When applicable refer to the Special Program or Pilot
Program product description and eligibility requirements for the program.
B. Processing Time
After eligibility processing and credit review of an Eligible Borrower, the Participating
Lender must obtain a firm commitment for mortgage insurance or guaranty. The
Eligible Borrower must be advised that four to six weeks may be necessary for
processing, and that delays by agencies of the federal government are not caused by nor
are they the responsibility of CHFA.
C. Issuance of Commitment
CHFA underwriters will review each loan submission package for accuracy,
consistency, completeness and compliance with the eligibility provisions in this
Manual. If the Loan is unacceptable, an Adverse Action Notice will be issued to the
Participating Lender only. Acceptable Loan submissions will be kept on file at CHFA
and a written Commitment to purchase will be issued for each acceptable submission.
A Commitment is valid for the term stated therein, and may be canceled or extended
upon written request from the lender which should be received at least 10 days prior to
the expiration date. The closed Loan must be submitted for purchase before the
Commitment expiration date.
D. Reservation and Commitment Date Expirations
CHFA will automatically cancel outstanding loan reservations not received for
processing on the day the reservations expire. Additionally, CHFA will automatically
cancel all outstanding Loan Commitments that have not been submitted to CHFA for
purchase on the date the Commitment expires.
Rev. 7-2018 Page 18
1. CHFA Loan Reservations
CHFA reservation shall expire on:
a. 90 days from the date of the reservation, or
b. On the date the Loan Commitment to Purchase is issued.
c. Requests for extensions of reservations must be received a minimum of seven
(7) days prior to the expiration date for consideration.
2. CHFA Loan Commitment to Purchase
a. CHFA Loan Commitments to Purchase shall expire 90 days from the date the
Commitment is issued.
b. Requests for an extension or cancellation of a Commitment shall be from the
Participating Lender only and must be in writing.
c. Requests for extensions of the commitment must be received a minimum of
seven (7) days prior to the expiration date for consideration.
E. Re-submission of Declined Loan Commitment Requests
When a Loan has been declined by CHFA for any reason specified on the Adverse
Action Notice, a Participating Lender may re-submit the Mortgage Loan package for
review only once. Such re-submission shall include additional evidence to assist CHFA
in evaluating the application. Different CHFA staff members authorized to review
mortgage loans shall review the submission and any re-submission of an application. If
declined a second time, an application may not be re-submitted.
5.6 Limited Documentation and Delegated Underwriting
CHFA will delegate underwriting of loans to Lenders meeting the criteria in this section
and accept limited documentation as described in 5.6D. CHFA review of these loans is
for the purpose of program compliance and issuance of a commitment letter.
A. Eligible Lenders
Participating Lenders must submit a request for approval to the Single Family
Underwriting Unit in writing for approval to participate in this program. CHFA will
evaluate the lenders overall performance when considering approval. CHFA will also
monitor and evaluate lenders participation in this program and reserves the right to
rescind approval.
Rev. 7-2018 Page 19
Lender acceptance into the Delegated Underwriting Program will include a review of
the following:
1. The average number of days from loan reservation to file submission
2. The quality and completeness of loan files submitted
3. The number and percentage of loans that are submitted with missing documentation
(based on individual lender volume)
B. Eligible Loans
1. Homebuyer Program loans with ratios conforming to (Section 5.1.D) of the CHFA
Operating Manual and/or
2. Loans processed through an approved automated underwriting system (i.e. Fannie
Mae DU, Freddie Mac LP,) which receive an “accept” or greater approval through
the system.
C. Ineligible Loans
1. CHFA first mortgage with DAP second loans.
2. Homeownership Program loans for tenants in public housing or publicly assisted
housing.
3. Rehabilitation loans.
D. Required Exhibits for the Limited Documentation and Delegated Underwriter’s
Commitment Package
Please submit all documentation in the following descending order:
1. STANDARD DOCUMENTS REQUIRED FOR ALL LOAN TYPES
a) A completed CHFA Processing Checklist & Loan File Submission Order Form,
as applicable for the appropriate CHFA Loan servicer. Idaho Housing and
Finance Association (Conventional or Government) or AmeriNat,
Conventional or AmeriNat Government/Service Retained Lenders Form.
Rev. 7-2018 Page 20
b) The CHFA “Additional Data” screen within LOS must be completed and an
updated Uniform Residential Loan Application, FNMA Form 1003 must be
uploaded to the LOS portal for Loan submission. The loan package will be
counted as “arrived” and included for review only upon receipt of these updated
and completed items.
Documents Specific to Insurer / Guarantor:
i. FHA Loans:
- HUD Form 92900-LT
- FHA Automated Underwriting Risk Status
- FHA requires the Employment Identification Number (EIN) of
any government, state, county, city municipalities and non-profit
organization that provides secondary financing assistance, grants, or
gifts to an approved borrower reflected on the HUD-92900LT. The
CHFA EIN Number is 06-1267528
ii. VA Loans:
-VA Form 26-6393 Loan Analysis or VA Form 26-1866 Commitment
-Veterans Statement Re: Due on Sale (Orig. Signature-CHFA Form 018-0296)
iii. PMI Loans:
-FNMA Form 1008 (Uniform Underwriting and Transmittal Summary)
-Copy of PMI commitment
iv. USDA- RD Loans:
-FMHA 3555-18 Conditional Commitment
-FNMA Form 1008 (Uniform Underwriting and Transmittal Summary)
v. Uninsured Loans
-FNMA Form 1008 (Uniform Underwriting and Transmittal Summary)
c. Automated Underwriting Risk Status Printout
d. Uniform Residential Loan Application (FNMA Form 1003)
e. Verification of Income/Employment (or Alternative Documentation)
Rev. 7-2018 Page 21
f. Pay Stub/s (3) /Divorce Decree/Legal Separation/Child Support
g. Signed copies of federal income tax returns for three (3) most recent years
(one (1) if targeted area)
h. Amendment to Sales Contract, Re: Efficiency Standard (New Construction)
i. First four (4) pages of the subject property Appraisal
2. CHFA REQUIRED FORMS
Note: Original signature/initials required (CHFA will accept faxed copies of
original documents. Participating Lender must certify the faxes are true copies of
the originals)
a. The Federal Recapture Tax – Notice to Mortgagor of Potential Tax - (CHFA
Form 051-0597)
b. IRS Form 4506-T or 8821 – Request for Copy or Transcript of Tax form or Tax
Information Authorization (request for 3 years, only one year if Targeted Area)
c. Borrower Eligibility Certificate (CHFA Form 014-1107)
d. Police Statement of Eligibility (CHFA Form 031-027)
e. Teachers Statement of Eligibility (CHFA Form 031-030)
Rev. 7-2018 Page 1
SECTION 6 – LOAN PREPARATION
6.1 Terms and Conditions of Loans
6.2 Title Insurance
6.3 Hazard/Flood Insurance
6.4 Property Description
6.5 Appraisal Requirements
Rev. 7-2018 Page 2
Section 6 – Loan Preparation
6.1 Terms and Conditions of Loans
A. Priority of Lien
Each loan must be secured by a valid first lien on the Eligible Dwelling. The
property must be free and clear of all prior encumbrances and liens except as
approved by CHFA, and no rights may be outstanding that could give rise to such
liens.
B. Validity and Enforceability
The note, mortgage deed, and any other instruments securing the Loan must be
legal, valid and binding obligations of the borrower, enforceable in accordance
with their terms, free from any right of set-off, counterclaim or other claim or
defense. The terms of the Loan may not be modified, amended, waived or
changed, except as approved by CHFA.
CHFA does not allow anyone that is not a mortgage loan applicant (i.e. borrower
or co-borrower) to sign the CHFA Mortgage Note or the CHFA Mortgage Deed
on any CHFA Residential Mortgage loan transaction.
If a spouse or Fiancee, or any other member of the household, is not an applicant
on the mortgage loan, (i.e. borrower or co-borrower), they may not execute the
CHFA Mortgage Note or the CHFA Mortgage Deed at closing, or otherwise
secure an ownership interest in the subject property.
No other person or entity may be added to the CHFA Mortgage Deed.
C. Terms
1. Fee Interest: The original term of a mortgage Loan shall not exceed thirty
(30) years.
2. Leasehold Interest: The original term of a mortgage Loan shall not exceed
thirty (30) years, and the term of the underlying lease shall not expire for at
least such number of years beyond the maturity date of such loan as is equal to
the number of years remaining to maturity. (Section 3.2D3)
Rev. 7-2018 Page 3
D. Amortization
Each Loan must be for a minimum of $10,000 and provide for regular monthly
payments, interest payable in arrears, with full amortization by maturity.
Amortization must commence within two months after closing. Monthly
payments shall be due on the first day of each month, and the final payment date
must be shown on the Loan documents.
E. Prepayment Penalty and Late Charges
Prepayment penalties are not permitted on any Loan. A Loan may provide for a
late charge in an amount not to exceed 5% on payments that are 15 days or more
past due.
F. Principal Amount Advanced; No Mandatory Future Advances
The full principal amount of the Loan must be advanced to the borrower or at his
direction at the closing. The borrower shall not have an option under the Loan to
borrow, from the Participating Lender, or any other person, additional funds
secured by the lien of the mortgage without the consent of CHFA.
G. Escrow Payments
Each payment must provide for the monthly collection of escrow payments for
real estate taxes, mortgage insurance premiums, hazard insurance premiums in
addition to the monthly installment of principal and interest. The Participating
Lender or Servicer shall pay interest on escrow deposits at a rate not less than the
minimum set forth in applicable statutes or regulations.
H. Maintenance and Insurance
The mortgage must obligate the borrower to maintain the Eligible Dwelling in
good repair and condition, to keep the premises free and clear from other liens
and encumbrances and to maintain hazard insurance in accordance with the
requirements set forth in section 6.3.
I. Interest Rate
The interest rate applicable to any Loan shall be the interest rate that is shown on
the Mortgage Loan Commitment.
Rev. 7-2018 Page 4
J. Forms
Each Loan must be executed on printed forms approved by FHA, USDA-RD, or
VA, where applicable, or on FNMA/FHLMC uniform instruments approved for
use in the State. The CHFA Uniform Mortgage Rider must be executed and
recorded. Condominium or PUD riders, as appropriate, must be executed and
recorded. The promissory note for each Loan must be endorsed by the
Participating Lender to CHFA unless the loan is being released for servicing
pursuant to Section 7.3.C.
K. Compliance with Laws
All requirements of federal and state laws, rules and regulations now existing or
hereafter adopted, applicable to mortgages and mortgage loan transactions,
including without limitation, truth-in-lending laws, equal opportunity laws, usury
laws and laws regulating interest on escrow accounts, must be complied with, and
the mortgage and the Participating Lender must not violate any such laws, rules or
regulations. In the case of any conflict between the requirements of this Manual
and any federal or state law, rule or regulation, the provisions of federal or state
law, rule or regulation shall govern and the Manual will be deemed to be amended
to conform thereto. CHFA must be notified of any such conflict known to the
Participating Lender.
6.2 Title Insurance
A. Original Mortgagee’s Policy
The mortgage must be covered by a mortgagee’s title insurance policy which
shows good and marketable title to the mortgaged property. The benefits of such
insurance must run to CHFA and must be issued on a form consistent with the
standard ALTA form by a title insurer acceptable to CHFA. The policy must be
in an amount equal to the original principal balance of the Loan. The original
policy must accompany the Loan purchase package and must be signed by a
licensed agent. The borrower shall be advised of the availability, coverage, and
cost of simultaneous issuance of owners’ title insurance; however, owners’
coverage is not required by CHFA.
B. Additional Requirements – Schedule A
1. The name insured should be in the following form: “(Participating Lender)
and/or Connecticut Housing Finance Authority, its successors and/or
assigns, as their interest may appear”. (The following abbreviation is also
acceptable: “…as their interests may appear” = ATIMA)
Rev. 7-2018 Page 5
2. Recording data for both the mortgage deed and the assignment of
mortgage to CHFA must be shown. (Note: CHFA is not a member of the
Mortgage Electronic Registration System, (MERS). Assignment of
CHFA mortgage loans in MERS is strictly prohibited. All CHFA
mortgage loan assignments must be in the name of the Connecticut
Housing Finance Authority (CHFA).
This policy may be amended by CHFA at will to accommodate the sale of
mortgage loan pools to GNMA or any other CHFA designated authorized
entity.
3. For all CHFA first mortgage loans delivered to CHFA sub-servicer,
(AmeriNat) the assignments must be in the name of the Connecticut
Housing Finance Authority, 999 West Street, Rocky Hill, CT 06067.
4. The title policy shall be endorsed from time to time as applicable to show
mortgage modifications and other correcting documents which may be
recorded.
C. Additional Requirements – Schedule B
1. If required, the survey must be an exhibit to the title insurance policy.
2. Exceptions for agreements or restrictive covenants of record relating to
cost, use, set-back, minimum-size, building materials, architectural,
aesthetic or similar matters (other than single family use restrictions on
two-to-four family properties) are acceptable to CHFA if:
a. There is no reversion or forfeiture of title in the event of violation
hereof;
b. The terms and provisions of such agreements or restrictive covenants
are commonly and customarily acceptable to prudent lending
institutions in the area in which the property is located; and
c. No violation of any such agreement or restrictive covenant exists.
3. Covenants, restrictions, agreements and other encumbrances must be
covered by title policy language which affirmatively insures that a breach
or violation of such covenants, restrictions, agreements and encumbrances
will not result in a forfeiture or reversion of title.
4. The following additional exceptions will be acceptable to CHFA:
a. Any mutual agreement of record which establishes a joint driveway or
an adjoining property, but only if the easement agreement allows all
Rev. 7-2018 Page 6
present and future owners, their heirs and assigns forever, unlimited
use of the driveway or party wall without any restriction other than
restrictions by reason of the mutual easement owner’s rights in
common and duties as to joint maintenance as applicable.
b. Encroachments on the subject property by improvements on adjoining
property where such encroachments extend one foot or less over the
property line, have a total area of fifty square feet or less, do not touch
any building and do not interfere with the use of any improvements on
the subject property or the use of property not occupied by
improvements.
c. Liens for real estate or other taxes and assessments not yet due and
payable.
d. Normal utility easements benefiting the subject property.
D. Standard Endorsements
The title insurance policy shall include the following standard endorsements, on
forms substantially the same as those indicated herein:
1. Residential Mortgage Endorsement – CTA Form 001 (where applicable).
2. Environmental Lien Endorsement – ALTA Form 8.1.
3. Condominium Endorsement – ALTA FORM 4 (where applicable).
6.3 Hazard/Flood Insurance
A. Coverage
An Eligible Dwelling securing the Loan must be covered by hazard insurance as
follows:
1. Fire and extended coverage insurance in an amount sufficient to cover the
outstanding principal balance of the Loan or the full insurable value of the
improvements on the mortgage property, whichever is less. In no event
shall the amount of coverage be less than the amount required by the
mortgage insurer or guarantor. Policies may contain a deductible clause up
to a maximum of $1,500.
Rev. 7-2018 Page 7
2. The Participating Lender shall advise CHFA of the nature of any hazard
not covered under the previous section and the additional insurance
coverage, if any, which has been obtained against such hazard. If
adequate insurance has not been obtained against such hazard, CHFA may
require the Participating Lender to obtain such coverage.
3. The Participating Lender is responsible for and warrants compliance with
the provisions of the Flood Disaster Protection Act of 1973 as amended
(42 U.S.C. 4001-4129), and the Biggert-Waters Flood Insurance Reform
Act of 2012, whenever such provisions would be applicable to any Loan.
If the Eligible Dwelling is located in an area having special flood hazards,
as identified by FEMA flood hazard mapping, flood insurance shall be
obtained in an amount equal to the lesser of (i) the outstanding principal
balance of the Loan(s), or (ii) the maximum limit of coverage available
under the National Flood Insurance Program, or (iii) the insurable value
(must include foundation) of the structure(s).
a. Flood Deductibles – The deductibles may not exceed the minimum
and maximum deductibles currently allowed under the NFIP for all
policy types.
4. Each hazard insurance policy must be written by a hazard insurance
carrier licensed to do business in the State.
5. Such insurance must be in effect on the closing date of the Loan and must
be paid in advance for a full year after the closing.
B. Policy Requirements
1. All policies of hazard insurance must contain or have attached a standard
mortgagee clause naming The Connecticut Housing Finance Authority
C/O, “(The loan servicer) its successors and/or assigns as their interest
may appear” as the insured. The following abbreviations are acceptable:
its successors and/or assigns = ISAOA
as their interest may appear = ATIMA
2. The policy must provide that the insurance carrier will provide written
notice to the loan servicer at least ten (10) days in advance of the effective
date of any change or cancellation of the policy.
3. The Participating Lender shall give any necessary notices in order to fully
protect the interest of CHFA as first lienholder under the terms of the
policy and applicable law.
Rev. 7-2018 Page 8
4. Refer to Section 7 – Loan Purchase for additional mortgagee clause
information as follows: Section 7.3.B – Release of Servicing for
Conventional Loans (Non-Government Insured Loans) or Section 7.3.C –
Release of Servicing and Loan Funding for Conventional Loans and
Government Insured Loans.
C. Unacceptable Policies
Policies are unacceptable if:
1. Under the terms of the carrier’s charter, by-laws or policy, contributions or
assessments may be made against CHFA or its designee; or
2. Contributions or assessments may be made against the borrower, which
could become a lien on the dwelling superior to the lien of the mortgage;
or
3. By the terms of the carrier’s charter, by-laws or policy, loss payments are
contingent upon action by the carrier’s board of directors, policyholders,
or members; or
4. The policy includes any limiting clauses (other than insurance conditions)
which could prevent CHFA or the owner of the property from collecting
insurance proceeds.
6.4 Property Description
A. Legal Description
The legal description in the mortgage deed, mortgagee’s title insurance policy and
other documents will be acceptable in the following forms and shall include the
property address and lot number if any:
1. Metes and bounds; or
2. Reference to lots which include reference to a filed map on which the lots
are delineated; or
3. Reference to the boundary lines of abutting streets and owners.
B. Loan Documents to be Consistent
The Participating Lender must check the Loan documents to assure that the legal
description contained or referred to in each document is accurate and consistent
with those in the others.
Rev. 7-2018 Page 9
6.5 Appraisal Requirements
A complete property appraisal report is required to be submitted by the Participating
Lender with each Loan submission except in the case of a loan eligible for the
Compliance Limited Documentation Program which requires submission of only the
first four (4) pages. Appraisals are required for all Loan submissions for purchases of
units in eligible condominium projects for verification of current investor ratio
concentration. All appraisals for Mortgage Loans must be made by appraisers who are
licensed or certified by the State of Connecticut, acceptable to CHFA and as per FNMA
Guidelines. Participating Lenders must adhere to the Appraiser Independence
Requirements as outlined in the FNMA Selling Guide.
a. Forms - The report must be prepared on a current FNMA/FHLMC
appraisal form or on the appropriate FHA form which meets the
minimum HUD requirements, including any additional attachments or
addenda necessary to provide an adequately supported opinion of
market value.
b. Appraised Value - Appraisals should report the highest price which the
property will bring contemplating;
(i) The consummation of a sale and the transfer of title from a
seller to buyer who are participating in a bona-fide, arm’s-
length transaction and are motivated by no more than the
goals of typical participants;
(ii) Both parties are well informed or well advised and act
prudently, each for what he considers his own best interest;
(iii) Reasonable exposure is given to the property in the open
market;
(vi) Payment is made in cash or on terms reasonably equivalent
to cash, assuming typical financing terms are available in
the community for similar property.
c. Repairs - CHFA requires all mortgaged properties to be in good repair.
Appraisal reports shall indicate whether a building code inspection is
necessary. If the appraisal report indicates that repairs are needed, a
recertification by the appraiser must be obtained prior to the closing of
the Loan. The certification must provide the Eligible Borrower’s name
and the property address and must state that the property has been
inspected and the indicated repairs have been completed except in the
case in which an escrow has been established for such repairs. (See
203(k) Standard or 203(k) Limited Programs – Section 4).
Rev. 7-2018 Page 10
d. Exterior Photographs – Clear, descriptive photographs showing the
front, back, and a street scene of the subject property and the front of
each comparable. The subject and all comparables must be
appropriately identified.
e. Interior Photographs – At a minimum, the appraisal report must include
photographs of the following:
The Kitchen
All bathrooms
Main Living Area
Examples of physical deterioration, if present; and
Examples of recent updates, such as restoration,
remodeling, and renovation, if present. (FNMA Selling Guide B4-1.2-01)
f. The validity period for all appraisals on existing and proposed and
under construction properties is less than 4 months. Appraisals may not
be more than 4 months old from the loan closing date to the date the
loan is sold to FNMA. (See FNMA announcement 09-19)
g. UCDP – Must obtain and provide a “successful” SSR report for loans
delivered to FNMA (uninsured – HFA Preferred Programs). (FNMA
Selling Guide B4-1.1-06)
Rev. 3-2018 Page 1
SECTION 7 - LOAN PURCHASE
7.1 Closing Procedures
7.2 Purchase of Committed Loans
7.3 Release of Loan Servicing
7.4 Preparation of Mortgage Releases
7.5 Assumption of Loans
Rev. 3-2018 Page 2
SECTION 7 - Loan Purchase
7.1 Closing Procedures
A. Scheduling
Participating Lenders are expected to close Loans in accordance with their established
practices. After receipt of a Commitment, the Participating Lender shall make
advance arrangements with the borrower to ensure agreement and understanding as to
the amounts of and who will pay closing costs, prepaid items and other escrows, costs
and fees. The closing must be scheduled at a time prior to the expiration of the
Commitment and at a time which is convenient for the borrower. However, the loan
may not be scheduled for closing until the Lender has received a CHFA loan
commitment letter. The Participating Lender should advise the borrower, at least
twenty-four hours prior to closing, of the total amount of funds which the borrower
must have at closing and the form in which such funds are to be made available.
B. Compliance with Laws
1. The Participating Lender shall be familiar with the Real Estate Settlement
Procedures Act (RESPA) and other federal or state laws applicable to closing
procedures for home mortgage loans, and must comply with their provisions.
2. None of the Mortgage loans are subject to, covered by, or in violation of the
Home Ownership and Equity Protection Act of 1994 (HOEPA) and its
implementing regulations (Reg. Z) or classified as “high cost”, “covered”, “high
risk”, “threshold” or “predatory loans” under any other applicable state, federal or
local law, including any predatory or abusive lending laws (or similarly classified
loans using different terminology under a law imposing heightened scrutiny or
additional legal liability for residential mortgage loans) or in violation of any state
law or ordinance comparable to HOEPA or Anti-Predatory Lending Laws.
3. In order to comply with Connecticut General Statutes 42-151 et. seq. (the
Connecticut Plain Language Law), a borrower with a Mortgage amount of
$25,000 or less shall be required to be represented by an attorney at the closing.
C. Escrows
1. The Participating Lender shall determine the amount of escrow payments with
respect to any Loan and make arrangements for the establishment of an escrow
account with the Servicer if the servicing is not to be done by the Participating
Lender. The Participating Lender or Servicer is to comply with the Department of
Housing and Urban Development Real Estate Settlement Procedures Act Escrow
Accounting Procedures.
Rev. 3-2018 Page 3
2. The Servicer shall escrow for real estate taxes, mortgage insurance premiums and
hazard & flood insurance premiums (when hazard insurance or flood insurance
premiums are required to be escrowed by the mortgage insurer or guarantor).
Servicer shall pay interest on escrow deposits at a rate not less than the minimum
set forth in applicable statutes or regulations. CHFA does not prohibit reasonable
and prudent investments of such escrow funds.
3. The Participating Lender shall escrow for undisbursed rehabilitation construction
amounts for Rehabilitation Mortgage Loans – currently 203(k) Standard or 203(k)
Limited Programs. (See Section 4).
Idaho Housing and Finance Association will take prepaid interest in the wire from
the date of purchase adjusting interest accordingly; see specific Idaho Housing and
Finance Association funding procedures, 7.3.C
D. Completed CLOSING Documentation
1. The Participating Lender shall verify that all Loan closing documents are properly
executed and witnessed and that signatures on all documents conform with one
another and to those on the original application.
2. Any erasures or corrected errors which appear on the note or mortgage deed must
be initialed by all parties who signed the documents.
3. Documents executed pursuant to a power of attorney should be accompanied by a
certified copy of the recorded power of attorney.
4. The Participating Lender must verify that the mortgage deed and assignment of
mortgage are complete, correct, properly acknowledged and otherwise in
recordable form. CHFA is not a member of the Mortgage Electronic
Registration System (MERS) and assignment of CHFA mortgage loans in
MERS is strictly prohibited.
5. For all CHFA first mortgage loans delivered to CHFA sub-servicer, (AmeriNat)
the assignments must be in the name of the Connecticut Housing Finance
Authority, 999 West Street, Rocky Hill, CT 06067.
6. The Participating Lender shall confirm that any special CHFA Commitment
instructions or conditions have been complied with.
E. Mortgage Insurance and Guaranty Requirements
1. All required mortgage insurance or guaranty forms and certificates shall be
properly completed and executed.
Rev. 3-2018 Page 4
2. Evidence shall be obtained indicating that any special terms and conditions stated
by the insurer or guarantor on its commitment have been satisfied.
3. The Participating Lender shall promptly notify the mortgage insurer of the
assignment of the mortgage:
a. Proof of the electronic mortgagee change is required for FHA loans.
b. The Loan Sale Notice form is required for PMI loans.
c. No form or notice is required for VA loans.
d. USDA-RD Form 3555-11, Guaranteed Rural Housing Lender Record Change.
F. Collection of Initial Payments
The Participating Lender should collect initial escrow payments, prepaid interest and
applicable fees at the closing.
G. Fees
1. All fees collected from the Borrower, including but not limited to, application fees
and processing fees shall not in their aggregate exceed the amount allowed by the
program. No additional fees may be charged by the Participating Lender to either
the seller or the borrower.
2. The Participating Lender will be allowed to recover from the borrower all
reasonable out-of-pocket expenses incurred in the Loan application in an amount
not to exceed 100% of actual cost. Out-of-pocket expenses include those cash
expenditures incurred by the Participating Lender to pay for outside services
rendered, such as appraisals by outside independent fee appraisers and credit
reports by independent credit reporting agencies.
3. The maximum allowable amount CHFA will allow a Lender to collect on first
mortgage loan transactions for the origination fee, processing fee and
underwriting fee are listed below:
a. Loan Origination Fees = 0 point (0.00%); or One point (1.00%) as
determined by the applicant.
b. CHFA Loan Processing Fee = $395.00
c. CHFA Loan Underwriting Fee = $395.00
Rev. 3-2018 Page 5
4. Document preparation fees may be charged if performed by a third-party not
controlled by the lender. If charged, the document preparation fee may not
exceed $300.00. (See FHA handbook 4155.1 RE-5 Settlement Requirement Section 1-9A)
H. TILA RESPA Integrated Disclosure
The borrower and the seller should receive a final itemized settlement statement of
loan terms and closing costs. (TILA RESPA Integrated Disclosure Form H-25(B) Eff.
10-3-2015). A signed copy of the form must be obtained.
I. Recording
Following the closing, the mortgage deed together with any necessary riders and the
assignment of mortgage shall be promptly recorded on the land records of the town(s)
in which the property is located.
7.2 Purchase of Committed Loans
A. Loan Purchase Procedure
1. CHFA will generally fund Loans on the date of the loan closing provided that the
Participating Lender faxes the CHFA Loan Purchase Request Form (Form 066-
0408) with copies of the Note/s prior to 12:00 noon in order for CHFA to be in a
position to affect same day purchase.
a. Originating Lenders are required to fax the CHFA Loan Purchase Request
form (066-0408-F) with Note copies prior to the 12:00 P.M. funding
deadline for all loans closed prior to the deadline.
b. Faxes received after 12:00 noon will be funded the following business
day.
c. If the loan is funded and does not close, the Lender will be required to
return purchase funds and will incur a penalty of $250.
d. Government Insured loans which are assigned and sold to Idaho Housing
and Finance Association will be purchased pursuant to the instructions in
Section 7.3.C.
Rev. 3-2018 Page 6
e. CHFA will not pay interest on purchases made after the date of loan
closing if the delay in purchase results from Participating Lender's failure
to fax by the 12:00 noon deadline.
f. All loan purchase requests must be faxed to CHFA within 48 hours of
loan closing. Please fax completed CHFA Loan Purchase Request Form
(CHFA form 066-0408) and executed and endorsed Note to (860) 721-9244.
2. The note amount must be what was issued on the commitment letter.
3. The interest rate must be what was issued on the commitment letter.
4. The amount of prepaid interest collected at closing should be calculated as a per
diem based on the actual number of days in the relevant year (365 or 366).
5. Calculate the interest payment from and including the closing date to but
excluding the date of the first monthly payment.
6. For all loans where prepaid interest is collected from the borrower at closing,
CHFA will collect prepaid interest from CHFA’s purchase date, not the closing
date provided that the loan is purchased by CHFA no later than two (2) business
days after closing.
7. For all loans purchased by CHFA three (3) or more business days after closing,
CHFA will continue to collect prepaid interest from the closing date of the loan.
8. After verifying that there is a valid CHFA Commitment, CHFA will confirm the
total amount of the purchase, net of prepaid interest and disburse this amount to
the Participating Lender.
9. Inasmuch as the Loan purchase is made prior to the review of the closed loan
documentation, the Loan is subject to repurchase by the Participating Lender as
explained in Section 7.2.C.
B. SUBMISSION OF LOAN DOCUMENTS FOR PARTICIPATING LENDERS
WHO RETAIN SERVICING
NOTE: Loans released for servicing shall follow the Submission of Loan
Documentation as described in Section 7.3. “Release of Loan Servicing”.
Participating lenders who retain servicing shall follow the instructions in this section.
Rev. 3-2018 Page 7
a. Each Loan purchase package shall contain all applicable documents
properly completed, IN A SINGLE PACKAGE.
b. This package shall be delivered to CHFA, Attention: Finance
Department, for review within 90 days after the date of the Loan
closing. The Loan purchase package must be identified clearly with
the CHFA Loan number which appears on the CHFA Commitment.
All further correspondence regarding a Loan file must refer to the
CHFA Loan number.
c. CHFA Documents may not be changed or altered in any manner
without the prior approval of CHFA. The Participating Lender must
use CHFA forms where applicable; computer generated forms, in
place of CHFA forms, are acceptable with prior written approval.
d. The Participating Lender will receive written notice of any defects in
the Loan or the documentation. The Participating Lender shall make
prompt and diligent efforts to supply adequate correcting or
supplemental documentation. In the event that the Loan purchase
package is not brought into compliance, repurchase may be required
and the Lender will incur a penalty of $250.
The following documents are required with each Loan purchase package submitted
1. Promissory Note (must be submitted at time of request)
A copy of the original executed promissory note, endorsed to CHFA as follows:
Loans sold to CHFA are to be endorsed as "Pay to the order of Connecticut
Housing Finance Authority without recourse”.
(PARTICIPATING LENDER)
BY
TITLE
DATE
a. CHFA is not a member of the Mortgage Electronic Registration
System (MERS) and assignment of CHFA mortgage loans in MERS
is strictly prohibited. All CHFA mortgage loan assignments must be
in the name of the Connecticut Housing Finance Authority.
b. In addition, loans in the amount of $25,000 or less must bear the
following attorney's statement, signed and dated by the borrower's
closing attorney: "I am an attorney at law and I represented the
borrower at this closing".
Rev. 3-2018 Page 8
2. Certificate of Mortgage Insurance or Guaranty
A copy of the mortgage insurance certificate must be submitted. (FHA, VA,
USDA- RD or PMI)
3. Participating Lender Certification (CHFA Form 019-1101) - A copy of the
completed certification must be signed by an authorized officer of the
Participating Lender.
4. A copy of the executed and recorded Assignment of Mortgage to CHFA
(CHFA Sample Form 036-1014-S).
5. A copy of original, executed DAP Note (CHFAFormDAP07NOT), if applicable.
CHFA DOWNPAYMENT ASSISTANCE LOANS
Depending on the Loan Servicer assigned, the following documents must be delivered to
Capital For Change, Inc. (C4C) or Idaho Housing and Finance Association (IHFA) as
follows:
CAPITAL FOR CHANGE, INC. (C4C)
Fax To: Capital For Change, Inc. (C4C) to Loan Servicing (860) 233-5165
Mail To: Capital For Change, Inc. (C4C) at 121 Tremont Street, Hartford, CT 06105
IDAHO HOUSING AND FINANCE ASSOCIATION (IHFA)
Upload in Lender Connection for Idaho Housing and Finance Association.
a. A copy of the executed & endorsed original DAP Note (CHFA Form
DAP07NOT).
b. The ORIGINAL executed & endorsed DAP Note (CHFA Form
DAP07NOT) and the ORIGINAL, recorded DAP mortgage deed (CHFA
Form DAP08MD) are to be sent, within 90 days of closing.
c. A copy of the TRID Closing Disclosure (CD) (formerly HUD-1 Settlement
Statement).
d. A copy of Hazard & Flood Insurance policies.
e. A copy of Uniform Residential Loan Application –
o First page only, sent to Capital For Change, Inc. (C4C).
o Full application included in first mortgage loan documents
sent to Idaho Housing and Finance Association (IHFA).
Rev. 3-2018 Page 9
f. A copy of W-9 Form/s for all borrowers.
g. A copy of the executed DAP commitment letter.
h. A copy of the executed Borrower Signature Affidavit for each borrower.
NOTE: A copy of the executed & endorsed, original DAP Note (CHFA Form DAP07NOT)
must also be sent to CHFA Finance Dept. – 999 West Street, Rocky Hill, CT 06067.
C. Repurchase Requirements
Upon a Participating Lender's failure to comply with reasonable requests from CHFA
to correct or complete documentation for any Loan purchase package or upon other
breach of the terms of the Master Commitment Agreement for Mortgage Purchases,
or any failure to comply with the requirements for eligibility set forth in this Manual
(which failure is to be determined in the sole discretion of CHFA) without regard to
whether the Participating Lender may be at fault, the mortgage will be reassigned to
the Lender. Lender shall repurchase the Mortgage Loan as provided in the Master
Commitment Agreement for Mortgage Purchases and the lender will incur a penalty
of $250.
Please Note: CHFA will require the Participating Lender to repurchase any loan
that has been closed in a loan amount and/or interest rate different than the loan
amount and interest rate stated in the commitment letter and the lender will incur a
penalty of $250.
7.3 RELEASE OF LOAN SERVICING
A. General
A Participating Lender who does not service CHFA mortgages must submit all loan
documentation as described in 7.3.B.1., 7.3.C.1. and 7.3.C.2. to the assigned Servicer
listed on the CHFA commitment. All servicing shall be carried out under the terms of
the CHFA Home Mortgage Servicing Agreement.
B. Release of Servicing - Conventional Loans (Non-Government Insured) to:
AMERINAT (formerly AmeriNational Community Services, LLC).
1. CHFA will purchase loans released for servicing to AmeriNat, pursuant to Section
7.2.A. of this Manual. Participating Lenders, releasing servicing to AmeriNat, will
deliver to AmeriNat within ten (10) days of the loan closing all those loan documents
pursuant to the Conventional Loan Delivery Checklist.
Rev. 3-2018 Page 10
2. Submission of Final Loan Documentation
The items listed in Section 7.3.B.1. will be sufficient for AmeriNat to set up
servicing. The originating Participating Lender must also submit the following
documents to CHFA immediately following the loan closing. Documents must be
submitted no later than 90 days from the date the loan is closed.
Loans in the amount of $25,000 or less must bear the following attorney's
statement, signed and dated by the borrower's closing attorney: "I am an attorney
at law and I represented the borrower at this closing".
CHFA is not a member of the Mortgage Electronic Registration System (MERS)
and assignment of CHFA mortgage loans in MERS is strictly prohibited. All
CHFA mortgage loan assignments must be in the name of the Connecticut
Housing Finance Authority.
a. A copy of the Certificate of Mortgage Insurance or Guaranty
b. A copy of the completed Participating Lender Certification (CHFA
Form 019-1101) signed by an authorized officer of the Participating
Lender.
c. A copy of the executed and recorded Assignment of Mortgage to
CHFA (CHFA Sample Form 036-1014-S).
The remaining final loan documentation including the following shall be submitted
within 90 days of loan closing:
AmeriNat
Attn: Wanda Attig
217 South Newton Avenue
Albert Lea, MN 56007
g. Original Note.
h. Original recorded Mortgage Deed with CHFA Uniform Mortgage
Rider/Owner Occupancy Certificate, (and Condominium or PUD
Rider, if applicable).
i. Original Title Insurance Policy.
j. Original PMI Certificate of Insurance, FHA Mortgage Insurance
Certificate, or the VA Loan Guaranty or USDA/Rural Development
Guaranty, as applicable.
Rev. 3-2018 Page 11
k. Original Participating Lender Certification (CHFA Form 019-1101).
l. Original Notice to Mortgagor of Max Recapture Tax (Form 051-0597).
m. Original recorded Assignment of Mortgage.
3. Mortgage Insurance Escrows
a. PMI (monthly) insured loans - Two month's mortgage insurance is to
be collected and remitted by the Participating Lender to the PMI
Company, at time of closing, in order to initialize the mortgage
insurance. In addition, the Participating Lender must file the
applicable notice of transfer form required by the PMI Company and
notify the customer that the first payment will include the monthly
PMI premium. AmeriNat will begin paying PMI premiums in the
month of the customer’s first due date.
b. PMI (annual) insured loans. Two month’s mortgage insurance is to be
collected for deposit into the escrow reserves by the Participating
Lender at time of closing. In addition, the first year’s premium should
be delivered to the PMI Company by the Participating Lender along
with the notice of transfer form.
4. Tax Escrows
Sufficient Tax Reserves should be collected for all Tax escrow items. All taxes
due within 30 days of closing must be paid at the closing and a paid receipt
provided with the original faxed package. Tax escrows should only be established
for real estate and fire district taxes. Escrows for other taxing authorities should
not be made part of the escrow account unless it is part of the real estate tax bill
(sewer and water use fees, etc).
5. Hazard/Flood Insurance Escrows
Two month’s hazard insurance reserve should be collected by the Participating
Lender at closing for the escrow reserves. Participating Lending will notify the
borrower at closing that one month’s premium will be part of the first monthly
payment.
6. Remitting Escrow Funds to AmeriNat
CHFA will wire Net Escrow Funds to AmeriNat
Rev. 3-2018 Page 12
7. Borrower Notification
a. The Participating Lender will notify the borrower that AmeriNat will
be servicing the loan per "RESPA" requirements and in compliance
with Federal Consumer Financing Laws applicable to servicing
transfers as outlined by CFPB in 12 CFR 1024.33, 1024.38,
10247.41.
b. The Participating Lender will notify the borrower that AmeriNat will
bill the borrower monthly for the mortgage payments which are to be
mailed to:
AmeriNat
217 South Newton Avenue
Albert Lea, MN 56007
c. When the loan is purchased by CHFA; borrower servicing inquiries
should be directed to:
AmeriNat
Toll Free at 1 (888) 263-7628 or Fax to (562) 745-1281
Website at: www.amerinatls.com
C. Release of Servicing and Loan Funding for Conventional & Government Loans:
IDAHO HOUSING AND FINANCE ASSOCIATION
This section relates to servicing transfers for loans delivered to Idaho Housing and
Finance Association such as:
a. Conventional Loans - (FNMA, CHFA uninsured)
b. HFA Preferred Program, PMI - (FNMA)
c. HFA Advantage Program, PMI - (FHLMC)
d. Government Loans - FHA, VA, USDA-RD - (GNMA)
(Service Release Lenders only)
1. The Participating Lender, releasing servicing to Idaho Housing and Finance
Association, will ship closed loan files immediately after closing, pursuant to
the Idaho Housing and Finance Association Loan Delivery Checklist.
In those commitment letters that CHFA issues for government-insured loans
to service-released Participating Lenders, CHFA shall specify the Mortgage
Loans to be assigned and sold to Idaho Housing and Finance Association.
After the closing of each Mortgage Loan, the Participating Lender shall upload
the loan file via the Lender Connection portal to Idaho Housing and Finance
Rev. 3-2018 Page 13
Association immediately following the Mortgage Loan closing, or by
overnight mail, those documents identified in Idaho Housing and Finance
Association Loan Delivery Checklist.
Idaho Housing and Finance Association shall be entitled to rely upon the
Participating Lender as assembler and preparer of all Mortgage Loan
documents, and is under no duty whatsoever to investigate or confirm any of
the information set forth therein as to its honesty, accuracy, or completeness
with respect to the origination, underwriting, and closing of the loan file.
Idaho Housing and Finance Association reviews the pertinent documents
necessary to ensure the loan meets secondary marketing guidelines, and is
under no obligation to re-verify the information contained in such documents
for accuracy.
a. Within 48 hours of the loan closing, please fax the completed CHFA
Loan Purchase Request Form (CHFA form 066-0408) to the purchase
desk at (860) 721-9244.
b. Idaho Housing and Finance Association will be responsible for
purchasing the first mortgage and service released lenders should
follow the instructions below (Submission of Loan Documentation).
c. If applicable, the DAP Loan will be funded by CHFA only upon
receipt and satisfactory review by Idaho Housing and Finance
Association of first mortgage loan documentation described in the
Loan Delivery Checklist, and upon CHFA’s receipt of the accurately
completed Loan Purchase Request Form (CHFA Form 066-0408) and
executed DAP Note.
2. Submission of Loan Documentation
a. Receipt of loan files through the Idaho Housing and Finance
Association’s Lender Connection portal https://www.lenderct.com
will initiate set up of the loan on Idaho Housing and Finance
Association’s servicing system to begin servicing of the loan. Idaho
Housing and Finance Association will notify Lender of any purchase
conditions to be cleared.
b. The Participating Lender must include the Loan Document Checklist
in stacking order, with the post-closing package. The Checklists can
be found on the CHFA website under the Lender section as (CHFA
Approved Servicer – Idaho Housing and Finance Association Reference
Guides) or within the Idaho Lender Connection portal website.
Rev. 3-2018 Page 14
c. The originating Participating Lender must submit closed loan files to:
Idaho Housing and Finance Association through the Lender
Connection portal found at https://www.lenderct.com.
Inquiries may be directed to:
Idaho Housing and Finance Association
Phone: 1(800) 219-2285 or [email protected]
d. Note Endorsement as follows:
Pay to the order of Idaho Housing and Finance Association
(No Ampersand signs, must spell out “And”)
Without Recourse
Lender Name
(signature)
Signatory’s typed name, Title
e. Assignment of Mortgage must be assigned to:
Idaho Housing and Finance Association
P.O. Box 7899
Boise, ID 83707 - or - MERS: IHFA #1009670
f. Conditions (files with document deficiencies) are communicated by
Idaho Housing and Finance Association through the Lender
Connection portal and by an email sent to the
Participating Lenders assigned contact person.
g. Participating Lenders must submit corrective/missing documentation
to Idaho Housing and Finance Association as soon as
possible. Faxed documentation submitted to clear conditions must
include a fax cover sheet, for each loan, clearly indicating the Idaho
Housing and Finance Association loan number.
h. Complete compliant loan files are purchased daily. If the loan is
not purchased sooner than within 15 days of the first payment due,
the first payment will be netted out of purchase amount (P&I only)
and the Lender must retain the first payment. Idaho Housing and
Finance Association will generate a Purchased Loan Summary
Statement for each loan purchased which can be reviewed and
printed through the Lender Connection portal – this statement will
account for the monthly escrow.
Rev. 3-2018 Page 15
i. Final recorded documents must be sent to Idaho Housing Finance
Association within 90 days of loan purchase to:
Idaho Housing and Finance Association
565 West Myrtle Street
Boise, ID 83702
Phone: 1 (203) 331-4883
3. Repurchase
CHFA will enforce its repurchase policies in the event of any loan document
deficiencies or loans that have been determined by the Servicer, FNMA, or
GNMA to be a Non-Qualifying Mortgage Loan. “Non-Qualifying Mortgage
Loan” shall mean any Mortgage loan received or serviced by Idaho Housing
and Finance Association with respect to which:
a. The Participating Lender fails to deliver to Idaho Housing and Finance
Association all documents of the first mortgage loan file (described in
the CHFA Operating Manual) on a timely basis or Idaho Housing and
Finance Association determines that such documentation for
Mortgage Loans does not conform to the requirements of the Program,
GNMA or FNMA Guide, or the CHFA Operating Manual.
b. FNMA, GNMA or Idaho Housing and Finance Association determine
that the Mortgage Loan is not of acceptable quality or is not eligible
for sale under the Program, FNMA or GNMA Guides, or the
CHFA Operating Manual.
c. “Repurchase Price,” with respect to a Mortgage Loan to be repurchased
from Idaho Housing and Finance Association by CHFA, is defined as
the payment of:
(i) 100% of the unpaid principal balance of Mortgage Loan plus
(ii) any accrued and unpaid interest at the annual rate borne
by the Mortgage Notes due and payable to FNMA or GNMA
upon purchasing out of the pool or to the date of repurchase if
not purchasing out of a pool plus,
(iii) the aggregate amount of any advances made by
or on account of Idaho Housing and Finance Association for
the Mortgage Loan,
Rev. 3-2018 Page 16
(iv) any attorney’s fees, legal expenses, court costs or
other expenses which may have been incurred or expended
by Idaho Housing and Finance Association in connection
with said Mortgage Loan, and
(v) any fees charged Idaho Housing and Finance Association
by FNMA, GNMA for repurchase or withdrawal of the
Mortgage Loan out of the applicable pool.
4. Escrows
a. Mortgage Insurance Escrows - FHA Insured Loans - No monthly FHA
premiums should be collected at closing for deposit into the escrow
account (in compliance with RESPA), however, Participating Lender
is responsible to collect and remit any upfront FHA premium due to
HUD and provide proof of such remittance with closing package. In
addition, Lender must advise borrower that first payment will include
monthly FHA premium.
b. Tax Escrows – Two months tax reserves should be collected for all
tax escrow items. All taxes due within 30 days of closing must be paid
at the closing and a paid receipt provided with the original package.
Tax escrows should only be established for real estate and fire district
taxes. Escrows for other taxing authorities should not be made part of
the escrow account unless it is part of the real estate tax bill (sewer
and water use fees, etc).
c. Hazard/Flood Insurance Escrows - Two months hazard insurance
reserve should be collected by the Participating Lender at closing for
the escrow reserves. The Lender will notify the borrower at closing
that one month’s premium will be part of the first monthly payment.
d. Hazard Insurance Mortgagee Clause - HomeLoanServ
its successors and / or assigns as their interests may appear,
P.O. Box 7899, Boise, ID 83709
5. Borrower Notification
a. As per “RESPA” requirements and in compliance with Federal
Consumer Financing Laws applicable to servicing transfers as
outlined by CFPB in 12 CFR 1024.33, 1024.38, 10247.41. The
Participating Lender will notify the borrower that HomeLoanServ
will be servicing their loan.
Rev. 3-2018 Page 17
b. The Participating Lender will notify the borrower that
HomeLoanServ will provide monthly billing statements.
c. Payments are to be mailed to:
Idaho Housing and Finance Association, Attn: HomeLoanServ
P.O. Box 7541, Boise, ID 83707-1899
d. Payments can also be made online thru: https://www.borrowerct.com
e. Borrower(s) Mortgage servicing inquiries should be directed to:
Idaho Housing and Finance Association, Attn: HomeLoanServ
Customer Service Toll Free: 1 (800) 526-7145
Mon. – Fri. (8:00 a.m. – 5:00 p.m. Mtn. time)
Website at [email protected].
f. The Participating Lender will provide the borrowers with the initial
Escrow Account Disclosure Statement.
6. DAP Loan Document Delivery Requirements
a. A Copy of the original DAP Note must be sent to the Capital For
Change, Inc. (C4C) within 24 hours of DAP loan closing.
b. The Original DAP Note and the original, recorded DAP mortgage deed
are to be sent, within 90 days of closing, to Capital For Change,
Inc. (C4C), 121 Tremont Street, Hartford, Connecticut 06105 or Idaho
Housing and Finance Association, as applicable.
7. Funding General
Upon receipt and satisfactory review by Idaho Housing and Finance
Association of required first mortgage loan documentation described in
Loan Delivery Checklists and if there is a DAP 2nd
mortgage, CHFA’s
receipt of the accurately completed Loan Purchase Request Form (CHFA
Form 066-0408) and copy of executed DAP Note; the loan(s) will be funded.
a. First Mortgage Funding - All CHFA first mortgage loans will be
funded by Idaho Housing and Finance Association after receipt by
Idaho Housing and Finance Association of complete, satisfactory
documentation. Loans will be funded daily by wire. If the loan was
not purchased sooner than within 15 days of the first payment due,
the first payment will be netted out of purchase amount (P&I only
with Lender retaining first payment).
Rev. 3-2018 Page 18
b. DAP Second Mortgage Funding - Upon notification from Idaho
Housing and Finance Association to CHFA that the first mortgage
loan has been funded, CHFA will purchase the DAP second loan for
the full Note amount, net of prepaid interest and disburse funds via
the wiring instructions CHFA has on file for the Participating Lender,
provided CHFA has received the Loan Purchase Request Form
(CHFA Form 066-0408) with the 2nd
mortgage data section accurately
completed and a copy of executed DAP Note was provided.
7.4 Preparation of Mortgage Releases for Loans Owned by CHFA
General
The Servicer of the CHFA first Mortgage loan (and UR Home Grant loan, if applicable)
will prepare and execute the Release of Mortgage on behalf of CHFA.
a. Limited Power of Attorney
CHFA gives a Limited Power of Attorney to each servicer to authorize the
servicer to release CHFA Home Mortgage loans that it services when the
loans are paid in full.
b. Standard Release for CHFA First Mortgage (and UR Home Grant Ln, if applicable)
The servicer must prepare the applicable standard release of mortgage for
all CHFA loans serviced.
c. DAP Loans
Capital For Change, Inc. (C4C), the servicer of DAP loans, will prepare
and execute the release of mortgage on behalf of CHFA for DAP loans or
Idaho Housing and Finance Association, as applicable.
7.5 Assumption of Loans
Important note: The following guidelines do not apply for loans purchased and
serviced by Idaho Housing and Finance Association
General
The Participating Lender will be required to provide different supporting
documentation and to observe different procedures for assumption of Loans
committed by CHFA prior to January 1, 1982, than for Loans committed by CHFA
after January 1, 1982. The first two digits of the CHFA Loan number indicate the
year of commitment for this purpose. Those procedures are discussed separately as
follows:
Rev. 3-2018 Page 19
A. Assumption of Loans Committed Prior to January 1, 1982
1. PMI Loans.
a. A PMI Loan may not be assumed without prior written approval from
CHFA. If the assuming borrower and the Eligible Dwelling meet
CHFA requirements in effect at the time of the assumption, approval
will not be unreasonably withheld.
The Participating Lender shall submit a Request for Approval of Assumption
together with the following forms and documents concerning the assuming
borrower:
1) FHLMC Loan Application Form
2) FHLMC Residential Loan Appraisal
3) Credit Report
4) Copy of Purchase Agreement
5) Verification of Income:
(a) Employment
(b) Federal Income Tax Return (latest year)
(c) Three most recent pay stubs
b. The assuming mortgagor will be required to execute a Loan
Assumption Agreement which shall include language affirming the
outstanding mortgage and promising to pay the remaining principal
balance of the debt, with interest. Said agreement shall be recorded
on the land records, and the original provided to CHFA with the
Participating Lender's notice of assumption.
c. The Participating Lender may charge an assumption fee of 1% of the
current outstanding balance of the Loan.
2. FHA Insured and VA-Guaranteed Loans.
A loan insured by FHA or guaranteed by VA may be assumed pursuant to
applicable federal requirements.
3. Notice. Notice of any assumption of mortgage shall be forwarded to CHFA.
a. Notice of an FHA or VA assumption must include:
(1) Copy of recorded warranty deed and, if used, the original
recorded assumption agreement.
(2) Evidence of hazard/flood insurance coverage.
Rev. 3-2018 Page 20
b. Notice of a PMI assumption must include:
(1) Original recorded assumption agreement and copy of
recorded warranty deed.
(2) Evidence of hazard/flood insurance coverage.
(3) Owner-Occupancy Certificate.
(4) Endorsement to mortgage insurance to show new borrowers
(5) TRID Closing Disclosure (CD) (formerly HUD-1). If there is
no HUD-1, a copy of a signed, itemized statement will be
acceptable.
c. An application for CHFA mortgage insurance may be submitted in lieu
of the above.
B. Assumption of Loans Committed After January 1, 1982
1. Qualifications Prior to Assumption
No Loan may be assumed without prior written approval of CHFA. CHFA
may approve an assumption of a Loan only if the assuming party qualifies as
an Eligible Borrower under Section 3.1 and the property qualifies as an
Eligible Dwelling under Section 3.2. In addition, disclosure and
acknowledgment requirements of VA, FHA, and USDA-RD rules and
regulations relating to assumption of mortgages, as applicable, must be met.
2. Mortgage Insurance and Guaranty Restrictions
In order to meet the requirements of Federal law relating to non-assumption of
Mortgage Loans, CHFA requires provisions to be stated in all Loans which
provide for acceleration of the maturity ("Due on Sale" provisions) on the sale
or conveyance of the security property to a person ineligible for a CHFA Loan.
CHFA may only approve assumptions if the following additional criteria, as
applicable, are satisfied:
a. In the case of a VA-guaranteed Loan, a copy of the veteran's consent
statement, as required by 36 CFR Section 36.4306(a) and (e), must be
on file with CHFA.
b. In the case of a PMI-insured Loan, the assumption must obtain written
PMI approval for the transfer of interest or obtain CHFA mortgage
insurance.
c. In the case of a USDA-RD-guaranteed loan, the assumption must
obtain written USDA-RD approval to be provided to CHFA.
Rev. 3-2018 Page 21
3. Required Documentation
The Participating Lender shall submit a request for assumption approval together
with evidence to establish the eligibility of the borrower and of the dwelling as of
the time of the assumption request to CHFA. Such evidence shall be a Loan
submission package with the forms and documents required in Section 5.5.
4. Assumption Closing
a. CHFA will review the eligibility of the proposed assumption and the
dwelling. If acceptable, CHFA will issue written approval of
assumption. The assumption closing may not take place unless the
Participating Lender has received approval from CHFA.
b. CHFA will require the following documents to be submitted with a
Notice of Assumption letter from the Participating Lender subsequent
to the closing:
(1) Original assumption agreement which shall have been recorded on
the land records and shall include language affirming the
outstanding mortgage and a promise to pay the remaining
principal balance of the debt, with interest.
(2) Evidence of PMI Mortgage Insurance, if a PMI Loan.
(3) USDA-RD Form 3555-17 with the completed assumption
agreement block in the case of an USDA-RD Loan.
(4) Participating Lender Certification (CHFA Form 019-1101).
(5) TRID Closing Disclosure (CD) (formerly HUD-1). If there is no
form, a copy of a signed, itemized statement will be acceptable.
5. Fees
The Participating Lender may charge an assumption fee of 1% of the current
outstanding balance of principal for a PMI insured loan. In the case of an FHA
insured and VA Guaranteed loans, a loan insured by FHA or guaranteed by VA
may be assumed pursuant to applicable federal requirements.
C. Release of Liability
CHFA will not release any borrower from liability following an assumption.
Rev. 11-15-2020 Page 1
SECTION 8 – DOWNPAYMENT ASSISTANCE
PROGRAM
8.1 Qualification of Participating Lenders
8.2 Funds Availability
8.3 Eligibility
8.4 Computation of DAP Loan Amounts
8.5 Application Processing
8.6 Loan Preparation
8.7 Loan Purchase
8.8 Servicing
8.9 Credit Review
8.10 Income
8.11 Co-Signers
8.12 Underwriting Ratios
8.13 Credit Reports
8.14 Credit Scores
8.15 Delinquent Credit
8.16 Property Repairs
Rev. 11-15-2020 Page 2
Section 8 - Downpayment Assistance Program The Downpayment Assistance Program (DAP) provides financial assistance in the form of second
mortgage loans to eligible first-time home buyers based on their financial needs to assist in the
purchase of a one-to-four family, condominium or planned community development eligible
property.
8.1 Qualification of Participating Lenders
All CHFA Participating Lenders and Correspondent Lenders are eligible to Participate in the
DAP program. Participating and Correspondent Lenders will be required to agree to the
following terms and conditions for authorization to originate the CHFA DAP second
mortgage product.
1. Written Agreement
Participating and Correspondent Lenders musts execute a DAP Participating Lender
Agreement. The Participating Lender will be required to comply with the terms of the
Agreement.
2. Termination
CHFA may terminate a Participating or Correspondent Lender for any reason. In the event
of termination, CHFA will provide the Lender with written notice specifying the reason for
the removal. Termination will become effective 30 days from the date of the written notice
to the Lender.
3. Training
Prior to originating a CHFA DAP loan, the Lender will be required to send designated
representatives to a CHFA DAP training class to learn the procedures for completing DAP
Loan Applications and for qualifying and calculating DAP loan amounts for eligible
borrowers. This class is offered FREE and is open to Loan Originators, Underwriters and
Loan Processors.
CHFA shall have the right to require a Participating or Correspondent Lender to attend a
re-training session when deemed appropriate.
Rev. 11-15-2020 Page 3
8.2 Funds Availability 1. Notice
CHFA will not provide Participating Lenders with written notice of funds availability.
Generally, mortgage money is available on a continuous basis. The interest rate for the
DAP Loan Program including any information on specific targeted funding special
initiatives will be included on the CHFA Loan Rate Sheet published on the CHFA website
at www.chfa.org.
2. Funds Registration
Participating and Correspondent Lenders shall register funds for the CHFA DAP second
mortgage loan simultaneously when registering funding for the CHFA first mortgage loan
program on the CHFA On-Line Reservation System. The Participating/ Correspondent
Lender Account Administrators will coordinate their staff access to the Reservation System
that is found on the CHFA website at www.chfa.org.
8.3 Eligibility
1. Eligible Borrowers and Dwellings
Eligibility for a CHFA DAP second mortgage loan shall follow the same criteria
established for the CHFA Home Mortgage Program Statewide except that borrower(s)
may not exceed the established CHFA Home Buyer Mortgage Program income limits for
the area.
Borrower(s) purchasing an eligible dwelling in designated Targeted Area Towns or
Targeted Area Census Tracts that are applying for CHFA DAP must have income that is
within the established income limit for the area. The Targeted Area income limit exemption
will not apply for these transactions.
2. Submission for CHFA Review
CHFA underwriters will review each DAP loan submission concurrently with the first
mortgage loan package. CHFA will make the final determination of the borrower's
eligibility for the program and may adjust the DAP loan request. If the loan is acceptable,
CHFA will issue a written loan commitment for loan purchase.
Eligible dwellings must meet all established criteria as described in (Section 3.2 A. and 3.2
B.) of this manual.
The following DAP documentation shall be submitted for review with each first mortgage
loan package:
Rev. 11-15-2020 Page 4
1) DAP Application and Asset Qualification Form (Available in CHFA LOS).
2) DAP Borrower's Certificate (CHFA Form DAP95-05).
3) A copy of the TRID Loan Estimate (LE) closing costs for first and second mortgages.
4) Copy of Housing Counseling Certificate from a CHFA sponsored class or other
approved housing counseling.
8.4 Computation of DAP Loans
1. Minimum Loan Amount
There is a $3,000 minimum loan amount.
2. Maximum Loan Amount
a. The maximum DAP loan amount is $20,000.
b. To obtain a DAP second mortgage; the first mortgage loan amount must
be the maximum loan-to-value (LTV) that the program allows.
c. The maximum CLTV for a CHFA DAP loan is 105%. (if applicant receives
subordinate financing from another CHFA approved provider, the CLTV may go
up to 105%).
d. CHFA will allow Participating Lenders to calculate the CLTV for loans with
CHFA DAP using the Base loan amount (excluding UFMIP) added to the
Total DAP loan amount divided into the sales price.
e. DAP for closing costs only will be permitted for USDA-RD and VA loan financing.
3. Asset Limitation/Borrower Contribution
a. Qualified borrower(s) may keep up to $10,000 of their own assets. All other
liquid assets owned must be used for the down payment and closing costs, with
the exception of the $10,000 and exclusion of retirement accounts. The applicant(s)
will only be permitted to retain their own liquid assets and will not be permitted to
use DAP funds to increase their assets.
b. Applicants will be required to make a minimum contribution of $1,000 towards
the transaction to be eligible for the DAP Program. The source of funds for the
contribution may come from a gift, from an eligible donor.
Rev. 11-15-2020 Page 5
c. CHFA will require Lenders to collect the three (3) most recent month’s statements
for all applicant(s) asset accounts. CHFA will review deposit and withdrawal
activity over the ninety (90) day period to determine any amount of funds in excess
of $10,000 required to be applied towards the cost of acquisition of the subject
property.
d. Lenders are required to document the source of funds for any deposit or withdrawal
in an amount that is equal to or greater than 10% of the borrower’s monthly income.
Deposits or withdrawals that do not meet this threshold do not require verification.
e. In the case of a 2 – 4 family home, applicants(s) may exceed the $10,000 limit
(if necessary) in order to retain the amount necessary to maintain the PITI reserves
required by the insurer and/or investor in order to include rental income in
underwriting ratios.
1. Definition of Liquid Assets
Assets include all assets of the applicants, (borrower and co-borrowers).
a. Any and all cash in checking and saving accounts; certificates of deposit (CD); or
money market funds;
b. Monies in trustee and or/or custodial accounts listed under the social security
number of the borrower(s);
c. Stocks, bonds and treasury bills;
d. 100% of the funds in any retirement plan including, but not limited to IRA accounts
and 401k plans may be excluded from inclusion in the DAP asset test calculations
even if the plan allows the applicant to borrower or withdraw from the plan.
e. Other assets which the Authority determines to be readily convertible to cash,
including but not limited to, equity in vacation homes, equity in mobile homes,
equity in real property and seller paid costs.
8.5 Application Processing
1. Application
The Participating Lender and borrower will complete and sign a DAP Loan application
and asset qualification form. This form serves the dual purpose of a mortgage loan
application and a calculation worksheet for the maximum DAP loan amount necessary
based on the borrower's needs for down payment and closing costs assistance.
Rev. 11-15-2020 Page 6
2. DAP Borrower's Certificate
The Participating Lender will provide and the borrower shall complete and execute a
DAP Borrower's Certificate (CHFA Form DAP95-05).
3. Homebuyer Education Counseling
At least one borrower listed on the DAP loan application must attend a homebuyer
education class facilitated by a CHFA approved Homebuyer Education Counselor. The
design of the course curriculum must include a minimum of 3 hours of class instruction.
The lender must advise the borrower of his/her responsibility to attend one of these
classes and provide him/her with a copy of the CHFA sponsored counseling session
classes or the names of other CHFA approved counseling providers. The CHFA
sponsored schedules can be found on the CHFA website at www.chfa.org shown
within the “Homebuyer Education Calendar”.
4. Underwriting
The Authority will underwrite CHFA Downpayment Assistance Program loans in
accordance with underwriting criteria established by the Authority and as described in
this section of the CHFA Home Mortgage Programs Operating Manual. First mortgages
underwritten in conjunction with DAP are subject to the same underwriting criteria as
described herein.
8.6 Loan Preparation
1. Terms and Conditions
The term of the DAP loan shall be the same as the term of the first mortgage loan. If
the homebuyer assigns, transfers, or otherwise conveys his/her interest in the dwelling
or ceases to occupy the dwelling, the unpaid principal balance of the loan shall become
due and payable.
2. Loan Amount
The DAP loan amount will be the minimum down payment and closing cost amounts
necessary based upon borrower’s financial needs in the purchase of an eligible dwelling.
3. Interest Rate
The interest rate for the DAP Second Mortgage Loan Program shall be listed in the
CHFA Interest Rates section as published on the CHFA website at www.chfa.org.
CHFA reserves the right to provide a sliding scale interest rate based on the borrower’s
income under the CHFA Homeownership Programs for any CHFA designated Special
Program Initiative. The maximum DAP interest rate will be capped at 6.00%.
Rev. 11-15-2020 Page 7
4. Fees
The Participating Lenders may charge a $250.00 application fee for processing DAP
loans and the actual costs for the recording fees which is retained by the Lender.
Title Insurance is not required on a DAP loan, however, Participating Lenders may
collect up to a maximum of $200.00 for settlement agent expenses associated with
closing the second mortgage loan. If necessary, other fees should also be adjusted to
insure that the total allowable fees do not exceed $550.00.
If the Participating Lender charges the $250.00 application fee and the actual recording
fees exceed $100.00, the maximum settlement agent fee must be decreased to ensure
the total allowable fees do not exceed $550.00.
5. Closing CHFA DAP Loans
All CHFA Downpayment Assistance Program loans (DAP) must be closed in the
name of the Connecticut Housing Finance Authority, 999 West Street, Rocky Hill,
CT, 06067. Loans closed in the name of the Connecticut Housing Finance Authority
do not require an assignment.
6. Prepayment Penalty
There is no prepayment penalty.
7. Late Charge
There is a $5 late charge for each monthly installment paid more than 15 days after the
due date.
8. Insurance
The Participating Lender will provide evidence of hazard insurance naming the
Connecticut Housing Finance Authority as the insured on the second mortgage. The
second mortgagee clause should read:
When the first mortgage is retained by the Lender for servicing - OR- the loan is a CHFA
whole loan serviced by AmeriNat: The Connecticut Housing Finance Authority, Its
successors and/or assigns, as their interest may appear, C/O Capital For Change, Inc.
(C4C).
When the first mortgage is serviced by Idaho Housing Finance Association (IHFA):
The Connecticut Housing Finance Authority, Its successors and/or assigns, as their
interest may appear, C/O HomeLoanServ.
Rev. 11-15-2020 Page 8
8.7 Loan Purchase 1. Scheduling
Participating Lenders are expected to close DAP loans in accordance with their
established practices (Operating Manual - Section 7.1A). The closing of the CHFA
first mortgage and the DAP second mortgage will be scheduled concurrently.
2. Loan Purchase Procedure
The Participating Lender shall follow (Section 7) of the Operating Manual. The CHFA
first and DAP second mortgages will be purchased concurrently. CHFA will purchase
the DAP second mortgage, less the prepaid interest.
3. Documentation
a. When the first mortgage loan is serviced by Idaho Housing and Finance Association
(IHFA), the DAP loan will also be serviced by Idaho Housing and Finance
Association (IHFA).
b. When the first mortgage loan is retained by the Lender for servicing - OR- the loan
is a CHFA whole loan serviced by AmeriNat, the DAP loan will be serviced by
Capital for Change, Inc. (C4C).
c. To request purchase and funding of all CHFA DAP loans whether serviced by
Capital for Change, Inc. (C4C) or Idaho Housing and Finance Association (IHFA):
The following documentation must be submitted to CHFA (within 24 hours of Loan
closing)
1) A fully completed CHFA Loan Purchase Request (CHFA Form 066-408)
signed by a “Duly Authorized Signatory” staff or designee;
2) A copy of the fully executed 1st Mortgage Loan Note endorsed to CHFA;
3) A copy of the fully executed 2nd Mortgage (DAP) Note closed in the
name of CHFA.
4) A copy of the fully executed DAP Commitment Letter.
Note: The information reflected on the executed Note(s); Commitment letter(s); and Loan
Purchase Request (CHFA Form 066-408), must match exactly and be accurately stated.
Funding may be delayed for any incomplete or inaccurate requests or documents submitted.
Rev. 11-15-2020 Page 9
d. A Copy of the original DAP Note must be sent to the applicable servicer:
Capital For Change, Inc. (C4C) - or - Idaho Housing and Finance Association
within 24 hours of the DAP loan closing.
e. The Original signed DAP Note, the Original recorded DAP Mortgage Deed,
and original Commitment Letter must be submitted to the applicable loan
servicer within 90 days of the loan closing:
1) Capital for Change, Inc. - ATTN: Loan Servicing Department,
10 Alexander Drive – Wallingford, CT 06492 - or -
2) Idaho Housing and Finance Association - ATTN: Loan Servicing Department,
565 W. Myrtle Street, Boise, ID 83702
8.8 Servicing
The servicing of the CHFA DAP second mortgage loan will be released to a CHFA
assigned third party servicer, currently Capital For Change, Inc. (C4C) - OR- Idaho
Housing and Finance Association (IHFA); each CHFA DAP second mortgage loan
commitment will list the name of the servicer assigned to that loan and the necessary
instructions to set up the release of servicing.
Assigned Loan Servicer Contact Information:
Capital For Change, Inc. (C4C)
Attn: Loan Servicing Department, 10 Alexander Drive – Wallingford, CT 06492
Fax - (860) 920-2041 Phone - (860) 233-5165 Ext. 2041
Email: [email protected]
Idaho Housing and Finance Association (IHFA)
Attn: Loan Servicing Department, P.O. Box 7541 Boise, ID 83707-7145
Toll Free: 1- (800) 526-7145
Email: [email protected]
The following documents will be required to be faxed or delivered overnight to Capital for
Change (C4C) - OR - uploaded in IHFA Lender Connection within 24 hours of loan
closing:
1. Original fully executed DAP Commitment Letter – (Form 024-0995 ALOS)
sent to C4C - or - IHFA, as applicable;
2. Copy of fully executed DAP second mortgage Note (Form DAP07NOT) sent to CHFA;
Original document sent to C4C – or – IHFA, as applicable;
Rev. 11-15-2020 Page 10
3. Original/Executed/Recorded, DAP second mortgage Deed (Form DAP08MD) – sent to
C4C - or - IHFA within 90 days of Loan closing;
4. Copy of fully executed TRID Loan Estimate (LE) – sent to C4C –or – IHFA, as
applicable;
5. Copy of fully executed TRID Closing Disclosure (CD) – sent to C4C - or - IHFA,
as applicable;
6. Copy of Uniform Residential Loan Application (1st page only) - sent to C4C;
7. Copy of W-9 Forms for all borrowers, (Request for TIN and Certification) - sent to C4C;
8. Copy of fully executed Borrower Signature Affidavit (Form 041-0718) for all
borrowers - sent to C4C;
9. Copy of declaration page/s of the mortgagor’s homeowners and flood insurance
policies and paid receipt with second mortgagee clause completed in the name of:
Connecticut Housing Finance Authority - sent to: (IHFA) C/O HomeLoanServ (P.O. Box
818007- Cleveland, OH 44181) - or - , Service Retained Lenders and CHFA whole loan serviced
by AmeriNat sent to: Capital for Change, Inc., (10 Alexander Dr.-Wallingford, CT 06492)
(servicers as applicable). It’s successors and/or assigns, as their interests may appear, (include
corresponding servicer address)
8.9 Credit Review
Evaluation
The Participating Lender is responsible for evaluating applicants for CHFA Loans.
Evaluation of creditworthiness must be done on a case-by-case basis, but standards for
determining income shall be applied to each applicant in the same manner.
8.10 Income
Restricted Use of Income from Overtime and Part Time Employment
Income used to calculate housing and debt ratios will be limited to a total of 60-hours of
income from either full-time employment combined with over-time earnings; or full-time
employment combined with part-time employment earnings.
1. Aggregate borrower and/or co-borrower’s income (gross income) shall include income
from whatever source derived, including without limitation, regular earnings; part-time
Rev. 11-15-2020 Page 11
earnings; unemployment compensation; bonuses; dividends; interest; commissions;
military allowances; welfare payments; disability payments; pension; annuity;
retirement and social security benefits; and reimbursement for services in military
reserve or National Guard. Overtime income, whether or not guaranteed by an
employer, shall be included unless of short duration and of a temporary nature.
2. Generally, unemployment compensation is not to be considered as part of income in
determining whether the borrower has the ability to repay the Loan. CHFA reserves the
right to consider unemployment compensation as acceptable qualifying income when:
a. The borrower and/or co-borrower is employed in a seasonal occupation and
receives unemployment compensation in “off season” periods;
b. The borrower and/or co-borrower’s employer schedules mandatory “shut-
downs” or furloughs on a recurring basis and provides unemployment
compensation benefits to eligible employees;
c. VA educational benefits are not to be considered part of income in determining
whether the borrower has the ability to repay the loan.
3. A divorced person shall submit a copy of the decree of dissolution of marriage as proof
of such status. A person who is separated from a spouse will be treated for income
limit purposes as being married, unless such person submits evidence of separation for
more than three years or a judicial decree of separation dated prior to the date of
application. An applicant’s fiancé will be considered part of the family unit regardless
of the proposed marriage date. In order for an unborn child to be considered a member
of the family in determining the number of family members for income limit purposes,
proof of pregnancy must be provided to CHFA- a doctor’s certificate is sufficient proof.
4. In cases where the applicant is self-employed, or one of the principal owners of a
business, the applicant’s Schedule C from the applicant’s two most recent federal
income tax returns or the business income tax return will be used, without adjustment,
to determine the income for purposes of eligibility. Self-employment or investment
losses and employee expenses on FORM 2106 will not be reflected for purposes of
eligibility under (Section 3.1B), but will be reflected for underwriting ratios.
5. Bonus and/or commission income may not be included as qualifying income unless the
borrower has a documented two (2) year history of receiving income from either of
these sources.
6. CHFA will accept FHA, USDA-RD, VA or PMI guidelines for the percentage (%) of
the fair market income from all rental units in an Eligible Dwelling of two to four units
to be included in total gross income for underwriting purposes.
Rev. 11-15-2020 Page 12
7. Prospective rental income from boarders in a one-family Eligible Dwelling is not
included in total gross income of the applicant for underwriting purposes and CHFA
income limits.
8. Alimony, child support or maintenance payments are to be included in income only to
the extent that they are likely to be consistently made. Factors which the Participating
Lender should consider in determining the likelihood of consistent payments include,
but are not limited to:
a. Whether the payments are received pursuant to a written agreement or court
decree;
b. The length of time the payments have been received;
c. The regularity of receipt;
d. The availability of procedures to compel payment;
e. Whether full or partial payments have been made;
f. The age of the child; and
g. The creditworthiness of the oblige, including the credit history of the oblige
where available to the Participating Lender under the Fair Credit Reporting
Act or other applicable laws.
The Participating Lender will submit to CHFA evidence adequate to support its
determination.
9. Income must be supported by copies of the borrower’s federal income tax returns in
accordance with Section 3.1.C.4 and copies of the three most recent pay stubs of the
borrower(s). The prospective borrower(s) must demonstrate stability of income from
all sources. Such wage and employment verification shall be obtained from the
applicant’s employer.
8.11 Co-Signors - Co-signors or guarantors are not permitted on a Loan.
8.12 Underwriting Ratios - (NO EXCEPTIONS ALLOWED)
1. Monthly Housing Expense-to-Income Ratio
CHFA will require that the monthly housing expense ratio (principal, interest, taxes,
insurance, [PITI] including payment on down payment assistance loans, along with any
other applicable housing expenses required to be paid in accordance with the Loan
terms) be less than or equal to 35% of the borrower’s gross monthly income.
Rev. 11-15-2020 Page 13
2. If the applicant is purchasing a Condominium or Planned Unit Development (PUD),
the periodic Condominium common charges i.e. Home Owner Association or HOA
fees or PUD fees to cover operating charges (excluding heat) and maintenance costs
and reserves must be included in the monthly housing expense.
3. Monthly Debt Payment-to-Income-Ratio CHFA will require that the total amount of monthly housing expense plus all other
monthly payments on installment loans, student loans, revolving credit debts does not
exceed 45% of the borrower’s gross monthly income.
4. Reserve requirements for 2-4 family properties must be in compliance with the insurer
(i.e. FHA, VA, USDA or PMI) or investor (i.e. FNMA / FHLMC) guidelines. The
funds needed to meet the reserve requirements will not be included in the $10,000 asset
test for DAP.
5. The Participating Lender must determine that the applicants housing payments plus
other obligations do not constitute an undue strain on the applicant’s ability to make all
such payments promptly and that a credit reputation is evidenced which would be
acceptable to a prudent institutional lender. Payment shock should be considered when
submitting a loan for down payment assistance.
6. No Exceptions Allowed - CHFA will not consider compensating factors for eligible
borrower(s) with debt ratios that exceed the maximum CHFA acceptable limits of 35%
for the monthly housing expense-to-income ratio and 45% for the monthly debt
payment-to-income ratio.
8.13 Credit Reports
CHFA requires all credit reports to be in the form acceptable to the mortgage insurers.
Additional credit information normally used by a Participating Lender in underwriting
evaluation must also be submitted to CHFA with the Loan submissions. In addition:
1. A history of slow payments on previous indebtedness must be explained
satisfactorily.
2. Frequent changes in employment or residence within the past five years must be
explained satisfactorily.
8.14 Credit Scores
CHFA is not a “credit score” driven program. CHFA will accept applications from Eligible
Borrowers for mortgage loan financing regardless of credit score, with traditional or
nontraditional credit references. Additional documentation may be required when there is
a history of slow payments, collections, judgments, charge-offs or otherwise delinquent
accounts.
Rev. 11-15-2020 Page 14
Participating Lenders submitting Loan applications with FHA, USDA-RD, VA or PMI
insurance are required to follow the Credit Score Guidelines of the insurer and may not
submit a loan application to CHFA that is noncompliant with the insurer criteria. The
Participating Lender will be required to repurchase a loan if it is rejected by the insurer for
noncompliance.
8.15 Delinquent Credit
The Participating Lender must include a signed and dated written credit explanation from
the borrower for all Loans submitted with credit reports that show delinquencies of 60-
days or more in the most recent 12 month period regardless of Automated Underwriting
System (AUS) or FHA Total-Scorecard findings.
1. Major indications of derogatory credit – including judgments, collections, charge-
offs, and other recent credit problems require satisfactory signed and dated
written explanations from the borrower.
2. CHFA DAP loans will require proof of payoff of all past-due credit accounts,
including but not limited to, collections, judgments and charge-offs, with the
exception of medical accounts.
3. CHFA DAP loans will also require payment of all State or Federal past due tax
obligations, including accounts with established payment arrangements, without
exception.
4. Applicants with a Discharged Bankruptcy, Foreclosure, Short-sale or Deed-in-lieu
reporting on their credit report will be eligible for DAP financing.
The acceptable amount of time that must have lapsed from the date of the event is the
greater of three (3) years or the amount of time required by the insurer, i.e. FHA, VA,
USDA or PMI, or the investors guidelines, i.e. FNMA or FHLMC.
The date of the event will be determined by the discharge, or dismissal date
(as applicable) of the derogatory credit event. (The applicable date of the event
will be the same for all types of Bankruptcy).
The following information must be provided:
a) The Borrower(s) must provide a signed and dated written credit explanation
for the delinquency;
b) The Borrower(s) has re-established traditional credit history (Non-traditional
not allowed). Re-established credit history shows on-time payments for
the most recent 12 month period;
Rev. 11-15-2020 Page 15
c) The debt ratios are conforming and do not exceed 35% / 45%;
d) The Borrower(s) meet all other CHFA program eligibility and
underwriting criteria.
8.16 Property Repairs
All repairs required by the property appraisal or negotiated between the seller and buyer
must be completed prior to closing. In some instances an escrow holdback for the repair
work may be allowed, if applicable (any request for escrows to repair items related to
“health and safety” will not be allowed). Request for escrow holdbacks must be submitted
in writing from the Lender for CHFA approval, (memos in the file or emails to the Director
of Single Family Programs are acceptable).
If the escrow holdback request is approved:
1. It must meet the requirements of the insurer and/or investor, i.e. FHA, VA,
USDA-RD, PMI, FNMA or FHLMC (depending on the product the loan is
originated under);
2. The escrow must be for a minimum of 1.5 times the cost to cure;
3. The cost of repairs must be paid by the seller;
4. The borrower may not pay out of pocket for any expenses or costs related to
repairs on the subject property to facilitate the loan closing;
5. The escrow may be held by the Lender or the borrower’s attorney;
6. Documentation of completion of repairs must be submitted to the CHFA
designated loan servicer and to CHFA for retention.
Rev. 6-2017 Page 1
SECTION 10 - APARTMENT CONVERSION
FOR THE ELDERLY (ACE) PROGRAM
10.1 Introduction
10.2 Eligibility
10.3 Application Process
10.4 Terms and Conditions
10.5 Construction Requirements
Rev. 6-2017 Page 2
Section 10 - Apartment Conversion For The Elderly (ACE)
The ACE program is offered by the Authority to enable elderly homeowners to convert space in
their single family homes into accessory apartments or to build additions to the home for that
purpose. Program based on availability of CHFA funding.
10.1 Eligibility
A. All homeowners must be 62 years of age or older.
B. Only single family owner-occupied homes in Connecticut are eligible.
10.2 Application Process
A. The applicant submits an application information form to the Authority.
B. A representative from the Authority contacts the applicant to complete an
application and obtains information regarding the homeowner’s financial status.
C. The Authority arranges for an appraisal of the home, as determined by the
Authority.
D. The Authority notifies the applicant of the final determination as to eligibility.
10.3 Terms and Conditions
A. Owner occupancy of the home is required during the duration of the mortgage
loan.
B. The loan amount may not exceed 80 percent of the appraised value of the home,
subject to a maximum loan amount determined by the Authority.
C. The construction funds shall be disbursed as the work is completed, as
determined by the Authority. The Authority shall review requests for
construction advances.
Rev. 6-2017 Page 3
D. During the construction period, interest only will be charged on the funds
disbursed to the borrower.
E. The borrower may choose to live in the newly converted apartment or in the
primary portion of the home.
F. The borrower must be represented by an attorney.
10.4 Construction Requirements
A. The proposed accessory apartment may be constructed either within the
existing walls of the home or as an addition.
B. The apartment must contain its own kitchen, bathroom, living and sleeping
facilities.
C. The apartment must be constructed by a contractor registered with the
Connecticut Department of Consumer Protection.
D. The apartment must conform to applicable local ordinances.
Rev 4-2017 Page 1
SECTION 11 – INVESTOR REPORTING AND
REMITTANCE GUIDELINES
11.1 Billing Overview
11.2 Remittance of Funds
11.3 Reporting
Rev 4-2017 Page 2
Section 11 – Investor Reporting and Remittance Guidelines
The Investor Reporting and Remitting Guidelines (IRRG) have been prepared by the Connecticut
Housing Finance Authority (CHFA) for institutions who service CHFA loans under its Home
Mortgage Program and other programs administered by CHFA on behalf of other investors (i.e.,
State of Connecticut Down Payment Assistance Program).
The IRRG are intended to provide instructions for the performance of the written agreements
between CHFA and the institutions which service CHFA loans. Accordingly, the provisions of
the IRRG are subject in all respects to the provisions in CHFA’s Procedures, the terms of the
Master Commitment Agreement for Mortgage Purchases, as amended, the Home Mortgage
Servicing Agreement, as amended and the CHFA Lender Guide-Operating Manual.
From time to time, CHFA may revise the IRRG and will provide notification to all Servicers.
11.1 Billing Overview
At loan purchase, CHFA disburses funds to the originating lender and the loan becomes active
on CHFA’s records. Concurrently, the Servicer establishes the loan on its records.
Prior to the end of each month, CHFA will send a Summary Level Payment Billing report to the
Servicer that will show the Net Amount Due.
Servicer Name
Rev 4-2017 Page 3
CHFA will also send the Detailed Level Payment Billing report that will show the detailed
billing amounts by loan of level payments due CHFA for each loan in the Servicer’s portfolio.
This billing report represents the amount of the level payments due for the Servicer’s next
reporting period. Each Servicer is required to reconcile the Net Amount Due from CHFA’s
Summary Level Payment Billing report to actual cash collected and remitted to CHFA. The
IRRG require that Servicers report only exceptions to normal loan activity (i.e., delinquencies,
prepayments, curtailments, reversals). This activity is processed and reconciled by CHFA. A
Servicer’s portfolio will not be amortized by CHFA until all exception details reported by the
Servicer have been balanced against the Monthly Remittance Reconciliation (“MRR”) form.
Once in balance, CHFA allows the amortization of the Servicer’s portfolio.
After receiving the monthly billing reports from CHFA, it is the responsibility of the Servicer to
prepare and reconcile the MRR form along with the supporting exception schedules to the Net
Amount Due from the CHFA Summary Level Payment Billing report. The Servicer’s Reporting
Package (refer to the Reporting section) is due to CHFA no later than the 10th
of each month.
Rev 4-2017 Page 4
CHFA’s system will calculate the principal, interest and servicing fee due for each loan based
upon the exceptions reported by the Servicer. CHFA then compares this activity to the
Servicer’s remittance amount reported on the Funds Transmittal Advice (FTA) form. Any
over/short remittance will be used to reduce or increase the next billing report.
All exceptions reported to CHFA by the Servicer must reflect the unique six or seven digit
CHFA loan identification number which is assigned to each CHFA loan.
11.2 Remittance of Funds
Servicer shall send all remittances via the FED wire transfer system using the following
instructions:
US BANK
225 Asylum Street, 23rd
floor
Hartford, CT 06103
ABA#: 091000022
A/C#: 173103321076
Account Name: US Bank Trust N.A.
Attn: Hartford Corporate Trust
For Further credit to CHFA# see table below for account # & description
Re: Serv# , (select one): Mid-Month or Month-End or Payoff Remittance
All wires must be received on or before 2:00 PM EST for same day credit.
Servicer Type Account # and Description
Regular Servicer 100006774 Holding Sub Acct
NIBP Servicer (700 series servicer #) 144148001 Securities-Revenue
DAP Servicer 100002747 Securities-DAP Esc
DAP Veteran’s Servicer 100006819 Esc VA DAP
Rev 4-2017 Page 5
Mid-Month Payment
On the 15th
day of each month, the Servicer must remit at least 70% of the total amount of
scheduled monthly level payments due on mortgages as shown on CHFA’s Summary Level
Payment Billing report.
In the event that the Servicer’s actual collections, up to and including the 14th
day of the month
are less than 70% of the Total Level Payments Due, the Servicer may remit the lesser amount
collected with written indication that such is the case.
Month-End Payment
On the 10th
day of the following month, the Servicer must remit the total amount of collections
(exclusive of escrow) through the month-end reporting date, less any servicing fee retained and
less the mid-month payment already remitted.
Loan Payoffs
The Servicers must remit, within three (3) business days after receipt, the amount of any
mortgage loan payoff, together with interest collected, less a pro-rated portion of the servicing
fees earned.
Late Remittances
Servicer shall pay a late charge billed by CHFA at CHFA’s current earnings rate for any period
of lateness. This includes late remittance of payoffs, mid-month and month-end payments.
Rev 4-2017 Page 6
11.3 Reporting
The Servicer’s Reporting Package must be received by CHFA by the 10th
calendar day of each
month (or the first business day following the 10th
if the 10th
falls on a weekend or holiday).
The Servicer’s Reporting Package will consist of the following:
a) Servicer’s Month-End Trial Balance report, REQUIRED
b) Servicer’s Month-End Collections report, REQUIRED
c) FTA (Funds Transmittal Advice) form, REQUIRED
d) MRR (Monthly Reconciliation Report) form, REQUIRED
e) Prepayments form/report, if applicable
f) Curtailments form/report, if applicable
g) Delinquent Level Payments form/report, if applicable
h) Reversals (Curtailments/Level Payments) form/report, if applicable
i) Delinquent Level Payments at Payoff form/report, if applicable
See Appendix A for sample forms. CHFA will accept all required monthly exception reporting
via paper or electronic file format as defined in Appendix B.
1. MONTH-END TRIAL BALANCE
The Servicer must send a copy of the Month-End Trial Balance report that shows the
Principal Balance and PTD of each loan at month-end. Each loan must be identified with
CHFA’s six digit loan number. The Servicer may elect to send this report electronically via
the specifications outlined in Appendix B. Please note, if opting to send electronically,
Servicer must ensure that the report is formatted to print properly without manipulation by
CHFA staff.
2. MONTH-END COLLECTIONS REPORT
The Servicer must send a copy of the Month-End Collections report. Each loan must be
identified with CHFA’s six digit loan number. The Servicer may send this report
electronically via the specifications outlined in Appendix B. Please note, it opting to send
electronically, Servicer must ensure that the report is formatted to print properly without
manipulation by CHFA staff.
Rev 4-2017 Page 7
3. FTA (FUNDS TRANSMITTAL ADVICE)
This form is used to report the monthly collections of principal and interest, net of servicing
fee retained. Any overages/shortages from the previous billing period and/or
overages/shortages related to payoffs should also be reported. The Total Monthly
Remittance from the Servicer Collection Totals should equal the Total Monthly Remittance
of the Servicer Remittance Totals for Mid-Month and Month-End payments remitted.
A. Servicer Collection Totals
Principal Collections
This amount should be comprised of all principal collected during the month including
curtailments, principal on regular payments, principal on prior due payments, principal on
prepayments and net of any principal returned due to reversal of curtailment or reversal of
previously paid level payments.
Interest Collections
This amount should be comprised of all interest collected during the month on regular
payments, interest on prior due payments, interest on prepayments and net of any interest
returned due to reversal of previously paid level payments.
Rev 4-2017 Page 8
Service Fee Retained
This amount should be the Service Fee earned on regular payments, prepayments and prior
due payments. This amount would be decreased by Servicer Fee returned due to the reversal
of previously paid level payments.
Over/Short Remittance
This is the amount billed or credited on the CHFA Summary Billing Detail report.
Over/Short remittances must be researched before remitting/netting.
Over/Short Remittance on Payoffs
This is the amount billed or credited on the CHFA Summary Billing Detail report.
Over/Short from payoffs must be researched before remitting/netting.
Total Monthly Remittance
Use the following formula to obtain this amount
Principal Collections
+ Interest Collections
- Service Fee retained
+/- Over/Short Remitted/Netted
+/- Over/Short on Payoffs Remitted/Netted
= Total Monthly Remittance
B. Servicer Remittance Totals
Mid-month Remittance
This amount represents the collections from the 1st through the end of business on the 14
th
day of the month or the 70% requirement billed on the CHFA Summary Billing Detail report.
It should be the amount wired to CHFA on the 15th
of the month being reported.
Month-end Remittance
This amount represents the collections from the 15th
through the end of business on the last
day of the month. It should be the amount wired to CHFA on the 10th
of the month following
the month being reported.
Other Payments
Indicate other remittances to CHFA during the reporting month, excluding payoffs. Please
include a brief description if any other monies were remitted.
Rev 4-2017 Page 9
Total Monthly Remittance
Use the following formula to obtain this amount.
Mid-month Remittance
+ Month-end Remittance
+ Other Payments (if any)
= Total Monthly Remittance
Both the Total Monthly Remittance lines must be the same amount.
Troubleshooting:
a. Principal
Adjust this amount for any adjustment transactions posted during the month to correct
for prior month errors. Make sure this amount does not include any principal
amounts collected at payoff.
b. Interest
If necessary, deduct prepaid interest posted on new loans. Adjust this amount for any
adjustment transactions posted during the month to correct for prior month errors.
Make sure this amount does not include any interest amounts collected at payoff.
c. Service Fee
Adjust this amount for any transactions posted during the month to correct for prior
month errors. Make sure this amount does not include any servicer fees retained on
payoffs.
d. Mid-Month & Month-End Remittances
Verify the dollar amounts and dates wired for compliance with requirements. The
Total Monthly Remittance from the Servicer Collection Totals should equal the Total
Monthly Remittance of the Servicer Remittance Totals for Mid-Month and Month-
End payments remitted.
Rev 4-2017 Page 10
4. MRR (MONTHLY REMITTANCE RECONCILIATION)
This form is used to reconcile the Net Amount Due from the CHFA Summary Level
Payment Billing to the Total Monthly Remittance wired to CHFA. The supporting
exception detail listings, collections report and trail balance will provide the detail for this
form.
Total Level Payments Due
This amount comes from the Net Amount Due on the CHFA Summary Level Payments
Billing report.
Prepayments
The total level payment amount collected and reported on the Prepayments exception
detail report/form.
Current Curtailments
The total of all curtailment amounts collected that are reported as “C” on the
Curtailments exception detail report/form. If the report does not distinguish between
current and prepaid curtailments, it will have to be done manually.
Prepaid Curtailments
The total of all curtailment amounts collected that are reported as “F” on the Curtailments
exception detail report/form. If the report does not distinguish between current and
prepaid curtailments, it will have to be done manually.
Rev 4-2017 Page 11
Delinquent Level Payments
The total level payment amount of all delinquencies reported on the Delinquent Level
Payments exception detail report/form.
Curtailment and/or Level Payment Reversals
The amount of all reversals of transactions from a previous month, including both
curtailments and level payments are reported on the Reversal of Curtailment or Level
Payment report/form.
Delinquencies at Payoff
The amount of all uncollected level payments for any Payoffs remitted for the current
reporting period are reported on the Delinquent Level Payments at Payoff report/form.
Service Fee Retained
The amount calculated as Due from CHFA on the collections report. This amount must
agree with the Service Fee Retained reported on the FTA form.
Net Amount Due
The formula for arriving at this number is as follows:
Total Level Payment Due (from CHFA Summary Level Payment Billing Report)
+ Prepayments
+ Current Curtailments
+ Prepaid Curtailments
- Delinquent Level Payments
- Curtailment and/or Level Payment Reversals
- Delinquencies at Payoff
- Servicer Fee Retained
= Net Amount Due
Total Monthly Remittance
The amount of the Total Monthly Remittance reported under Servicer Collection Totals
and Servicer Remittance Totals on the FTA. The Total Monthly Remittance amounts
reported on the FTA form must agree with the Total Monthly Remittance reported on the
MRR form.
Over/Short Remittance
This amount is the difference between the Net Amount Due and the Total Monthly
Remittance. Ideally, this difference should be zero. Frequently, there is a difference
which should be identified. See the descriptions for each line of the MRR below for
common reconciling tips that may help identify this difference. Common reconciling
items are often identified in Delinquencies at Payoff, Curtailments, Reversals and
Over/Short remittances from a prior month.
Rev 4-2017 Page 12
Proceeding through the guidelines, items reported incorrectly will be identified and the
amounts reported above will have to be adjusted accordingly. The ultimate goal is to
have a zero Over/Short Remittance or an Over/Short Remittance that can be explained.
Ending Loan Count
This is the total number of active loans at the end of the month being reported, which can
usually be obtained from the Trial Balance.
Ending Principal Balance
This is the aggregate outstanding balance at the end of the month being reported, which
can usually be obtained from the Trial Balance.
5. PREPAYMENTS
A loan is considered prepaid when a full level payment is collected for a future scheduled
payment. A future scheduled payment is any payment collected and applied after the
current period.
Rev 4-2017 Page 13
For Example: The reporting month is May 2014. All loans on the Servicer’s Trial
Balance with paid-to-dates of June 2014 or greater are considered prepaid.
Use the CHFA Prepayments form. A computer facsimile is acceptable in lieu of this
form provided the following information is reported: CHFA Loan Number, Prepayment
Amount (must be equal to one level payment), Paid-To-Date of the loan after the
payment is applied and Total of all prepayments. Report only those prepayments
collected during the current reporting period.
Enter the Total from the Prepayments form/report on line 2 of the MRR form.
Troubleshooting:
a. Verify all the prepayments being reported were collected in the reporting month;
b. Scan the prepayment report for paid-to-dates less than or equal to reporting month;
c. If there are negative amounts, check to see if they are offset by positive amounts for same
loans. These would be payments that were made then reversed during the same month so
should not be reported. If not, refer to the loan history or collection report to identify true
prepayment reversals. If true reversals exist, these amounts will need to be reported on
the Reversal of Curtailment or Level Payment form.
Rev 4-2017 Page 14
6. CURTAILMENTS – CURRENT AND PREPAID
There are two types of curtailments: Current and Prepaid (or Future Curtailments).
Curtailments are unscheduled payments applied towards the borrower’s unpaid principal
balance. Curtailments may be made for any amount less than the loan balance.
CHFA DOES NOT ACCEPT CURTAILMENTS ON DELINQUENT LOANS.
Use the CHFA Curtailments form. A computer facsimile is acceptable in lieu of this form
provided the following information is reported: CHFA Loan Number, Curtailment
Amount, Date the Curtailment is being applied for, ‘C’ or ‘F’ to delineate a Current or a
Future curtailment.
Report only those curtailments collected during the current reporting period. If a
computer generated report is submitted instead of the CHFA Curtailments form, identify
the prepaid (future) curtailments from the current curtailments by highlighting,
asterisking or some other mechanism. One way to differentiate between current and
prepaid (future) is the paid-to-date.
Rev 4-2017 Page 15
Current Curtailments
Current curtailments can only reported on current loans. Current curtailments must
always be applied after the current month’s level payment has been applied.
Prepaid (Future) Curtailments
Prepaid (future) curtailments can only be reported on prepaid loans. The miss-
application of prepaid curtailments can create principal balance differences between the
Servicer and CHFA.
Enter the Total from the Curtailments form/report on line 3 of the MRR form.
Troubleshooting:
a. Scan the paid-to-dates of each loan to separate the Current Curtailment total from the
Future Curtailment total.
b. If there are negative amounts, check to see if they are offset by positive amounts for same
loans. If so, remove both the positive and negative amount from the report.
c. If not, refer to loan history or collection report to identify true curtailment reversals or
internal adjustments from previous months.
d. If true reversals exist, these amounts will need to be added back to the curtailment report
totals and the reversals will need to be reported on the Reversal of Curtailment or Level
Payment form.
e. If a reversal exists on the curtailment report that is due to the reversal of a previous
months curtailment on delinquent loan, this amount will need to be added back to the
Curtailment report totals and the reversal will not reported on the Reversal of Curtailment
or Level Payment form. This negative amount will offset with previous month’s overage
reported by CHFA.
Rev 4-2017 Page 16
7. DELINQUENT LEVEL PAYMENTS
The Delinquent Level Payments must always be in a multiple of the loan’s level payment
amount. Once a delinquency is reported for a given reporting period, it should continue
to be reported as long as any level payment delinquency remains outstanding.
Use the CHFA Delinquent Level Payments form. A computer facsimile is acceptable in
lieu of this form provided the following information is reported: CHFA Loan Number,
Total Delinquency Amount thru the current month end reporting period, Total number of
level payments delinquent and the Paid-To-Date of the loan.
CHFA’s will not accept any partial payments. Therefore, if a partial payment is received,
it will result in a delinquency. Partial payments are to be held by the Servicer until a full
level payment can be processed on the loan. At that time, the full level payment will be
due in the remittance.
Rev 4-2017 Page 17
Continue to report delinquencies, even if foreclosure proceedings have commenced, until
title is taken and reported to CHFA. Once title is taken, the loan should be moved off the
Trial Balance (many Servicers transfer the loan to another Investor number until all
claims are filed and property is disposed of.)
Enter the Total from the Delinquent Level Payments form/report on line 4 of the MRR
form.
Troubleshooting:
a. If CHFA has removed loan(s) from the CHFA Detailed Level Payment Billing report due
to title being taken and the loan still resides on the Servicer’s Trial Balance report, it will
have to be manually deducted from the Delinquent Level Payments report and the Total
delinquency amount.
8. REVERSAL OF CURTAILMENT OR LEVEL PAYMENT
Rev 4-2017 Page 18
Use the CHFA Reversal of Curtailment or Level Payment form. A computer facsimile is
acceptable in lieu of this form provided the following information is reported: CHFA
Loan Number, Amount of Reversal, the Original Date Reported for the transaction and a
‘C’ or ‘N’ to indicate that it is a Curtailment or NSF (reversal of level payment).
Please review the collections report for reversal transactions. If there is a negative
transaction for a loan during the reporting period, then identify whether it is a curtailment
reversal, a payment reversal, an adjustment for prior period error or a wash. Refer to the
loan history or collections report to identify the type of reversal.
Curtailment Reversal
A curtailment reversal consists of principal only. If a curtailment reversal exists, identify
the month the curtailment was reported and remitted to CHFA. CHFA cannot reverse a
curtailment that has not been previously reported and remitted. Each curtailment reversal
must be reported individually.
Payment Reversal
A payment reversal consists of both interest and principal. Please make sure the payment
amount being reversed equals one full level payment amount. Multiple payment reversals
for one loan must be reported individually.
If the reversal causes the loan to be delinquent, the reversals and delinquencies must be
reported separately. It will be necessary to manually adjust the delinquency amount by
the reversed payment(s). CHFA cannot reverse a payment that has not been reported and
remitted.
Reversal for a prior period posting error
Adjustment reversals are commonly used to reverse curtailment on delinquent loans from
a prior period, to apply principal balance adjustments due to incorrect amortization from
a prior period or to process a reapplication of payments. This type of reversal should not
be reported to CHFA. The amount of the adjustment reversal should be added back to
the appropriate category on the MRR form and also back into the Total Monthly
Remittance reported on the FTA form.
Offsetting Transactions
If the net of all transactions for a loan is zero, then there is no need to report a reversal.
Enter the Total from the Reversal of Curtailment or Level Payments form/report on line 5
of the MRR form.
Rev 4-2017 Page 19
9. DELINQUENT LEVEL PAYMENTS AT PAYOFF
Use the CHFA Delinquent Level Payments at Payoff form to report level payments
included on the current month’s Level Payments Billing report but not collected on
payoffs or foreclosures. A computer facsimile is acceptable in lieu of this form provided
the following information is reported: CHFA Loan Number, Total Delinquency Amount
of all delinquent payments, # of Payments Delinquent at Payoff, and the Paid-to-Date of
the loan at payoff.
Payoffs
It is necessary to report to CHFA all level payments not collected for the loan up to and
including the current month’s level payment. Do not report the payoff anywhere if the
borrower made a payment up to current month because the billing report anticipated its
collection.
Foreclosures
All level payments not collected should be reported. Once reported, the foreclosed or
assigned loan should no longer be carried on the Trial Balance (many Servicers transfer
the loan to a different Investor number). CHFA will no longer bill for the delinquent
level payments.
Enter the Total from the Delinquent Level Payments at Payoff form/report on line 6 of
the MRR form.
Rev 4-2017 Page 20
Troubleshooting:
a. Take the previous month’s payoff/removals report to make sure the loans paid off are
removed from the CHFA Detailed Level Billing report. If loan(s) have been paid off
but are still on CHFA’s Detailed Level Payment Billing, it is necessary to manually
adjust the total delinquency amount.
b. CHFA removes loans upon receipt of funds. Due to the three (3) days remittance
period, loans that are paid off at the end of the month may still be billed. Any loan
paid off but still being billed by CHFA will have to be manually added to the
form/report.
10. LOAN PAYOFF
Servicer must remit final payments within three (3) business days from the loan payoff
date.
Use the CHFA Loan Payoff from to report/remit final payments to CHFA, along with the
payoff report for verification.
Rev 4-2017 Page 21
Loan Payoff Date
The actual date the loan was paid in full.
Date Remitted
The actual date the funds were remitted to CHFA. This must be within 3 business days
of payoff (including the date of payoff)
CHFA Balance Prior to Payoff, Per Latest Detailed Level Payment Billing
In order to reconcile the Servicer’s to CHFA’s principal balance, always report CHFA’s
Principal Balance prior to payoff from the most recent CHFA Detailed Level Payment
Billing report.
Date of CHFA Detail Level Payment Billing Report Used
The Due Date shown in the header of the Summary Level Payment Billing report.
Interest P-T-D @ Payoff
This date is the Paid-to-Date on loan prior to receiving the payoff funds.
Principal Portion of Level Payments Applied Prior to Payoff
This amount is the total amount of principal collected for level payments and
curtailments not yet reported to CHFA but collected and posted prior to payoff.
Principal Portion of NSF Reversals
This amount is the total amount of principal reversed due to NSF payments not yet
reported to CHFA but posted prior to payoff.
Curtailments Applied Prior to Payoff
This amount is the total of all curtailments collected but not yet reported to CHFA prior
to payoff.
Curtailment Reversals Prior to Payoff
This amount is the total amount of principal reversed due to curtailment back outs not yet
reported to CHFA but posted prior to payoff
Rev 4-2017 Page 22
Unidentified (Send a Loan History)
This represents any unidentified balance difference between the Servicer’s principal
balance at payoff and the calculated CHFA principal balance. The following formula will
calculate any Unidentified amount:
CHFA Principal Balance Per Latest Detailed Level Payment Billing
- Principal Portion of Level Payments Prior to Payoff
+ Principal Portion of NSF Reversals
- Curtailments Applied Prior to Payoff
+ Curtailment Reversals Prior to Payoff
- Servicer’s Principal Balance at Payoff
= Unidentified
If unidentified differences exist, a loan history is required along with the Loan
Payoff form and the Servicer’s payoff report.
This next section of the form is to report the breakdown of the payoff remittance. Use the
Payoff section of the collections report to this section of the form.
Servicer Principal Balance at Payoff
The principal balance of the loan when payoff funds are collected.
Interest Collected at Payoff
Interest remitted at payoff. Interest must be calculated using a 365/366 day year. Use the
following formula to calculate the interest due CHFA within three (3) business days after
the loan payoff date:
Formula:
(Principal Balance at Payoff x Note Rate / 365(366) x # of days from P-T-D through and
including the date of payoff)
NOTE: If the loan was prepaid at the time of payoff, the Interest rebate will be netted
from the remittance due amount.
Servicer Fee Retained at Payoff
Servicer fee due to the Servicer from CHFA for the final payment collection. Servicer
Fee Retained must be calculated using a 365/366 day year. Use the following formula to
calculate the servicer fee retained by Servicer at loan payoff:
Formula:
(Principal Balance at Payoff x Servicer Fee Rate / 365(366) x # of days from P-T-D
through and including the date of payoff)
NOTE: If the loan was prepaid at the time of payoff, the Servicer Fee Retained rebate
would be added to the remittance due amount.
Rev 4-2017 Page 23
Total Remitted
(Within 3 Business Days After Payoff Date [including date of payoff])
Calculate Total Remitted as shown below:
Servicer’s Principal Balance at Payoff
+ Interest Due Calculated and Collected at Payoff
- Servicer Fee Retained Calculated and Collected at Payoff
= Total Remitted
CHFA will review the payoff remittance including principal, interest and service fee for each
loan. If CHFA’s calculations do not reconcile with the Servicer’s, a letter will be sent explaining
the difference.
For each payoff, determine if there are any delinquent payments. Verify that all delinquent
payments including the current month are reported on CHFA’s Detailed Level Payments Billing
report. If included on the Billing report, loan delinquency must be reported on the Delinquent
Level Payment at Payoff form for the reporting period in which the loan paid off (refer to
Delinquent Level Payments at Payoff section).
Rev 4-2017 Page 29
Connecticut Housing Finance Authority
PREPAYMENTS
PERIOD ENDED: / /
IF MULTIPLE PREPAID LEVEL PAYMENTS PER LOAN USE A SEPARATE LINE FOR EACH PAYMENT.
MORTGAGOR’S
LAST NAME
SIX DIGIT CHFA
LOAN #
PREPAYMENT
AMOUNT
PTD OF
PREPAYMENT
TOTAL (P):
IRRG\EXCEPT-P FORM.DOCX
Rev 4-2017 Page 30
Connecticut Housing Finance Authority
CURTAILMENTS
IDENTIFY WITH "C" FOR CURRENT MONTH CURTAILMENT OR "F" FOR CURTAILMENT ON A
PREPAYMENT
MORTGAGOR’S
LAST NAME
SIX DIGIT CHFA
LOAN #
AMOUNT OF
CURTAILMENT
MONTH TO BE
APPLIED C or F
TOTAL (CC/CF):
IRRG\EXCEPT-CC/CF FORM.DOCX
PERIOD ENDED: / /
Rev 4-2017 Page 31
Connecticut Housing Finance Authority
DELINQUENT LEVEL PAYMENTS
PERIOD ENDED: / /
MORTGAGOR’S
LAST NAME
SIX DIGIT
CHFA LOAN #
TOTAL
DELINQUENCY
AMOUNT
# OF
PAYMENTS
DELINQUENT PTD OF LOAN
TOTAL (D):
IRRG\EXCEPT-D FORM.DOCX
Rev 4-2017 Page 32
Connecticut Housing Finance Authority
DELINQUENT LEVEL PAYMENTS AT PAYOFF
PERIOD ENDED: / /
MORTGAGOR’S
LAST NAME
SIX DIGIT CHFA
LOAN #
TOTAL
DELINQUENCY
AMOUNT
# OF PAYMENTS
DELINQUENT @
PAYOFF
PTD OF LOAN
TOTAL (DP):
IRRG\EXCEPT-DP FORM.DOCX
Rev 4-2017 Page 33
Connecticut Housing Finance Authority
REVERSAL OF CURTAILMENT OR LEVEL PAYMENT
PERIOD ENDED: / /
IF MULTIPLE LEVEL PAYMENTS ARE TO BE REVERSED, USE A SEPARATE LINE FOR EACH PAYMENT.
IDENTIFY WITH "C" FOR REVERSAL OF CURTAILMENT OR "N" FOR REVERSALOF LEVEL PAYMENT.
MORTGAGOR’S
LAST NAME
SIX DIGIT CHFA
LOAN #
AMOUNT OF
REVERSAL
ORIGINAL DATE
REPORTED C or N
TOTAL (RC/RN):
IRRG\EXCEPT-RC/RN FORM.DOCX
Rev 4-2017 Page 35
CHFA Automated Exception Reporting Requirements
Must send electronic file within same time frames as paper files
Must submit one file per Servicer #
File can be either fixed length or .CSV format
First line may contain column headers, all other lines must be data only
File Format should include:
o Exception Code (1 or 2 digits), valid inputs are:
P – Prepayment (must list each prepayment individually)
D – Delinquency (one record for total delinquency per loan)
DP – Delinquent Payments on Payoffs
CC – Current month curtailment
CF – Curtailment for future month
RN – Reversal of level payment
RC – Reversal of previous curtailment
RP – Reversal of prepayment
PO - Payoff
o CHFA Loan # - 6 digits (must be no less, no more than 6 digits-required)
o # Payments Delinquent – only required for delinquencies – code D or DP
o Amount of Exception
Will be the monthly level payment amount for codes P, RN or RP.
Will be the total of all delinquent payments due from next due date thru the
current reporting date for codes D or DP.
Will be the amount of additional principal paid for code CC, CF or RC. Note: any
RC transactions must match exactly the amount of the original curtailment
transaction being reversed.
Will be the total amount of the Payoff (Principal + Interest received) for PO
transactions.
o Payment Due Date of Exception (format is YYYYMMDD)
If prepayment, enter 1st of the month of the due date the payment is being made
for.
If delinquency, enter 1st of the month of the due date of oldest payment still due.
If current month curtailment, enter any day after the first of the month.
If future month curtailment, enter any day after the first of the month of the
prepayment.
Will be due date of the level payment being reversed for code RN or RP.
Will be the month the original curtailment was applied for code RC.
o Comment (not required) up to 100 characters
File Names
o Naming convention: <Servicer#>_YYYYMMDDHHMM.csv
Example: 0102_201403041130.csv
Rev 4-2013 Page 1
SECTION 12 – DELINQUENCY & FORECLOSURE
REPORTING
12.1 List of Approved Law Firms
12.2 Claims Submission and Expense Reimbursement
12.3 90 Days or More Delinquency Reporting
12.4 90 Day Delinquency Form
12.5 Code Translation Table Form
12.6 Foreclosure Initiation/Action Notification Reporting
12.7 CHFA Foreclosure Approval Initiation/Action Notification
12.8 Additional Changes to Current Requirements
12.9 Safekeeping of Authority Documents
12.10 CHFA Delinquency Intervention Counseling Program
12.11 Sample Reporting Stream
Rev 4-2013 Page 2
2.1 Law Firm Selection
Effective October 1, 2005, the servicer will hire a law firm to represent the Authority’s interests regarding
collection and/or foreclosure of delinquent single family mortgages.
Attorney’s fees are allowed in accordance with the current HUD schedule of allowable attorney fees.
Servicers are required to monitor the performance of the hired law firms and are responsible for all issues
regarding representation.
Rev 4-2013 Page 3
12.2 Claims Submission and Expense Reimbursement
Servicers will use CHFA’s mortgagee number for the filing of HUD claims, list CHFA as the Payee
for all PMI claims, list CHFA as the Holder for all VA claims and provide CHFA copies of all
claims at the point of submission to the insurer.
CHFA will wire* to the Servicer, within 2 business days after its receipt, expense reimbursement
proceeds. Debenture interest will be included in the case of HUD insured loans. In the event of
HUD curtailment of amounts owed CHFA:
o CHFA will deduct the amount of the curtailment from the expense claim proceeds and wire the
net amount to the servicer within 2 business days after receipt. Upon CHFA’s receipt and review
of supporting documentation from the Servicer evidencing that they, or their attorney, were not
responsible for the curtailment, the balance of expense proceeds received from the insurer will be
remitted to the Servicer.
o Servicer must continue to attempt collection of the curtailed amount from the responsible party
and remit to CHFA immediately upon receipt. If, after 90 days of effort, Servicer is unable to
collect and remit the curtailed amount to CHFA, Servicer must contact CHFA’s Finance
Department (860-571-4292) to discuss continued collection efforts.
o For all expense reimbursements due the Servicer in excess of what the insurer will cover, the
Servicer will continue to provide all supporting documentation as was required prior to the new
process for reimbursement from CHFA.
o In the event of an insurer audit, the Servicer will be liable for payment of any and all
reimbursements and penalties assessed by the insurer for improper claim filing, including but not
limited to lack of appropriate supporting documentation.
o CHFA will no longer accept or reimburse for expenses submitted by the Servicer after six
months from the date that the original insurer claim was filed on HUD and VA insured loans or
after six months from title taken date on all other loans.
Failure to use CHFA’s mortgagee number for claims filing will result in a penalty of $250 per claim.
CHFA Foreclosure Expense Pre-Reimbursement Option (the “Option”)
In order to mitigate the impact of carrying large foreclosure expense balances on CHFA’s behalf for extended
periods of time on loans in foreclosure, each servicer desiring to participate may submit an Option package (the
“Package”) to CHFA for review and payment. This Package must include a cover page detailing each of the
expenses for which reimbursement is being requested (with the total amount requested) along with all invoice
support that CHFA requires for routine expense reimbursement for normal post-claim filings.
CHFA will pre-reimburse servicers selecting this new Option, for certain categories of expenses.
CHFA reserves the right to suspend availability of this Option either temporarily or permanently and/or
change the parameters of this Option at any time without prior notice. CHFA may also suspend specific
servicers from using this Option if CHFA determines, in its sole discretion, that the servicer has failed to
follow the parameters of the Option to CHFA’s satisfaction.
Rev 4-2013 Page 4
Option Parameters
Foreclosure must have been initiated and a CHFA Foreclosure Approval Initiation/Mitigation/Action
Notification form must have been submitted to CHFA prior to Package submission.
For insured loans, servicer must file the 1st insurer claim within 60 days of receiving payment from
CHFA for the Package. The only exceptions to this filing date are:
o Legal delays such as court scheduling, mediation hearings and litigation
o Delays due to eviction
o Delays due to substantial rehabilitation
If the 60 day deadline is unable to be met due to any of these issues, the servicer must report the
reason(s) for the delay as well as a detailed plan that includes the expected time frames to
complete and file the applicable insurer claim on the Option Compliance Report.
Servicer must file for the 2nd
insurer claim (where applicable) within 30 days of the submission of the 1st
claim on FHA insured mortgages and within 60 days for all other insurance types.
By the 10th
of each month, Servicer must submit the Option Compliance Report to CHFA effective as of
the previous month end detailing each loan that CHFA reimbursed under this Option for which
foreclosure or other property disposition has not been completed. Document Library Any loan that has
failed the time frames established in the parameters will require an explanation in the Comment/Plan
section of the report.
The only foreclosure expenses available under this Option are:
o Condo/Association Fees o Committee Fees
o Attorney Fees o Recording Fees
o Title Search o Bankruptcy Fee
o Sheriff Fees o Eviction Fee
o Inspections o Court Entry Fee
o Appraisal o Title Insurance Policy
o Property Preservation o Mediation Fee
o Utilities o Property Registration
As always, servicers will continue to be responsible for any curtailments imposed by the insurers (i.e.
CHFA will net any curtailment due to servicer error/omission from proceeds received). Additionally –
all proceeds are to be remitted directly to CHFA from the Insurer. Any sales proceeds received by the
servicer must be immediately forwarded to CHFA.
*Outgoing wire instructions must be provided to CHFA for expense. Wire instructions should be on Servicer’sletterhead, signed by an authorized officer, and directed to Hazim Taib, Chief Financial Officer and must include the following information:
Servicer’s Bank Name Servicer’s Bank Address and ABA Number Account Name Account Number Mailing Address of the Account to be Credited
CHFA will not be responsible for any delays in the receipt of funds if the requested information is not provided on this form.
Rev 4-2013 Page 5
12.3 90 Days or More Delinquency Reporting
CHFA requires each servicer to report on a monthly basis for each loan that is 90 days or more delinquent. The
attached Code Translation Table Form contains a list of valid reporting codes that must be assigned to each
loan that is 90 days or more delinquent. CHFA has tried to stay as consistent as possible with current HUD
reporting codes. In an effort to accommodate various servicing systems, CHFA will not require servicers to
change their current reporting codes. Each servicer must fill out the attached Code Translation Table Form and
return it to CHFA via fax @ (860) 257-8375, or e-mail to [email protected] no later than close of business
on February 15, 2005. Please note that you must indicate a Servicer Reporting Code for each CHFA Reporting
Code listed. At any time in the future, if your code structure changes or you undergo a system conversion, etc.,
you are required to re-submit a new Code Translation Table Form to CHFA before you begin reporting using
your new codes.
For all loans that are 90 days or more delinquent, you are required to report one of the codes listed on the Code
Translation Table Form. This reporting must be cut-off on the last business day of each month and be
received by CHFA on or before the tenth day of the following month. This reporting will be accepted in one of
the following three formats:
Manually reported using the attached 90 Day Delinquency Form
Via spreadsheet, using the format defined below and named as ###MMYY.xls where ### is your 3 digit
CHFA servicer number and MMYY is the month and year being reported:
o CHFA Loan # (text field) – 6 digit CHFA loan number
o Servicer Loan # (text field) – loan number assigned by Servicer
o Servicer Number (3 digit numeric field) – 3 digit code assigned by CHFA to identify Servicer
o Servicer Reporting Code (may vary with each servicer - 2 digit numeric field for CHFA codes) –
Servicer Reporting Code currently assigned to the loan 90 days or more delinquent as defined on
the Code Translation Table Form
o Date Code Set (mm/dd/yyyy date field) – Date this code was assigned to the loan
o Comment (text field) – should include any comments added to this loan during the most recent
reporting period
Via data file, in a comma delimited file format with the fields in the same order as listed above for
reporting via spreadsheet and named as ###MMYY.txt where ### is your 3 digit CHFA servicer number
and MMYY is the month and year being reported
Reporting of 90 day delinquency codes is required on a monthly basis until the loan either becomes less
than 90 days delinquent or until all insurer payments have been received by CHFA.
If you have no loans within your portfolio that are 90 days or more delinquent, you are required to report
this to CHFA as well. This may be done utilizing the 90 Day Delinquency Form and writing in “No 90+
Day Loans” in the Comments section, or via email @ [email protected]
.
Rev 4-2013 Page 6
12.4 90 Day Delinquency Form Use this form, or spreadsheet or data submission to report ALL loans that are 90 days or more delinquent. Information must be cut-off on the last
business day of each month and be received by CHFA no later than the 10th
day of the following month. If mailing, please submit to the attention of
the Finance Department at the address below. Manually completed forms or spreadsheets may be faxed to (860) 257-8375 or e-mailed to
[email protected]. Data submissions must be e-mailed to [email protected].
Month End Date (month and year)
CHFA Servicer #
Servicer Name
CHFA Loan #
Servicer Loan #
Reporting
Code
Date Code
Assigned
Comments
(should include all comments added since the last reporting cycle)
Rev 4-2013 Page 7
12.5 Code Translation Table Form
Date
CHFA Servicer #
Servicer Name
CHFA
Reporting
Code
Code Description
Servicer Reporting
Code
01 Chapter 13 Bankruptcy
03 Cramdown
04 Condo Action
08 Chapter 7 Bankruptcy
09 Forbearance
10 Partial Claim
11 Unable to Convey-Occupied
12 Repayment
15 Pre-Forc Acceptance Plan Available
17 Pre-Forc Sale
20 Reinstated by Mortgagor who Retains Ownership
26 Refinance
28 Modification
30 Third Party Sale
32 Military Indulgence
42 Delinquent/Standard Collection Processes
43 Foreclosure Started
45 Foreclosure Completed
46 Property Conveyed to Insurer & Claim Submitted
47 Deed in Lieu
49 Assignment/Refunding
68 First Legal/Foreclosure In Process
73 Charge Off-No Release
78 Unclaimable Condition
Completed By:
Printed Name:
Rev 4-2013 Page 8
12.6 Foreclosure Approval Initiation/Mitigation/Action Notification Reporting
The CHFA Foreclosure Approval Initiation/Mitigation/Action Notification form must be used to notify CHFA of any
loan that is entering foreclosure or that has had an action for which CHFA must be notified immediately. These actions
include Foreclosure Initiation, Date of First Legal, Title Taken Date, Bankruptcy Status and Date, Bankruptcy
Dismissal Date, Date/Amount that Court/Attorney Proceeds Received, and Property Conveyance Date. This form must
be legible and faxed to the number indicated on the form. This form can also be downloaded from CHFA’s website at
www.chfa.org from the Lender forms section.
Section A – Loan Information
This section must be filled out every time this form is faxed to CHFA. All information requested in Section A must be
completed. This form should be faxed to CHFA on a “real time” basis (i.e. immediately upon the occurrence of any
action listed on the form). All other monthly 90 day delinquency reporting must be cut-off on the last business day of
each month and be received by CHFA on or before the tenth day of the following month.
Date – Date form being completed and faxed to CHFA
CHFA Loan # - 6 digit loan number assigned by CHFA
Servicer Loan # - Loan number assigned by Servicer
Borrower Name(s) – List all borrowers listed on mortgage
Insurance Type – Check the correct box to indicate how the loan is insured
Short Sale Prior to Foreclosure Initiation – Check box if this is occurring
Section B - Foreclosure Initiation
This section must be completed once all loss mitigation requirements have been satisfied and the loan is being assigned
to an attorney for foreclosure action. Receipt by CHFA of this form with this Section completed constitutes CHFA’s
approval to foreclose.
Date Counseling Letter Sent – Date 60 day counseling letter originally sent to borrower
Owner Occupancy Verified – Must check box indicating whether owner occupancy was verified. If
property is not owner occupied, Servicer must provide an explanation in the Comments section of the form.
Check any/all loss mitigation codes that may apply for this loan
Loss Mitigation Certification
o By – Should be the signature of the authorized officer verifying all guidelines were followed
o Printed Name – Name of person signing above
o Phone # - Number at which person above can be reached with any questions
o Email – Email address at which person above can be contacted
Foreclosure Start Date – Date Servicer hired attorney to begin foreclosure process
Attorney/Firm Assigned – Name of attorney/firm hired
Section C – Foreclosure Action Notification
This section must be completed anytime one of the six following actions occurs. CHFA must be informed of any of
these actions as soon as they occur – this reporting cannot wait until the month end cut-off reporting cycle
Date of First Legal – Date Lis Pendens filed/Sheriff hired
Title Taken Date – Date title was taken
Bankruptcy Status/Date – The date the borrower filed for Bankruptcy protection and the type of bankruptcy
filed
Bankruptcy Dismissal Date – The date the Bankruptcy was dismissed by the court
Date/Amount Court/Attorney Proceeds Received – Date proceeds were received from the court or the
attorney and the amount of proceeds received
Property Conveyance Date – Date property conveyed to Insurer/CHFA
Section D – Comments
This section can be used to add any additional comments that are relevant to the action being reported, but is not required except as
noted in Section B.
Rev 4-2013 Page 9
12.7 CHFA Foreclosure Approval/Mitigation/Initiation/Action Notification Fax to: (860) 257-8375
ATTN: Finance Department
A. Loan Information
Date:
CHFA Loan #: Servicer Loan #:
Borrower Name(s):
Insurance Type: FHA VA PMI CHFA Uninsured RDA
Check if Short Sale Prior to Foreclosure Initiation:
B. Foreclosure Initiation Date Counseling Letter Sent:
Owner Occupancy Verified: Yes No (if No, Comment is required)
Check all boxes that may apply:
Code Description Code Description 12 Repayment 10 Partial Claim
09 Forbearance 17 Pre-Foreclosure Sale
28 Modification 47 Deed-In-Lieu
49 Assignment/Refunding
I certify that all CHFA guidelines, or any other requirements per the guarantor, were followed
prior to initiating foreclosure: (For CHFA or uninsured loans, HUD guidelines, excluding partial
claims should be followed)
By:
Printed Name:
Phone #:
Email Address:
Foreclosure Start Date:
(Date Attorney hired)
Attorney/Firm Assigned:
C. Foreclosure Action Notification
Date of First Legal: Title Taken Date:
Bankruptcy Status: Chap 7 Chap 13 Bankruptcy Date:
Bankruptcy Dismissal Date:
Date Court/Attorney Proceeds Received: Amount:
Property Conveyance Date:
D. Comments
Rev 4-2013 Page 10
12.8 Additional Changes to Current Requirements
Beginning March 1, 2005, requirements under the following sections of the CHFA Home Mortgage Servicing
Agreement shall be changed as follows:
The below changes DO NOT SUPERCEDE any insurer requirement. To the extent that there is a present or
future conflict with this Supplement and/or the existing CHFA Home Mortgage Servicing Agreement and
insurer requirements, the Servicer MUST FOLLOW ALL INSURER REQUIREMENTS in order to preserve
CHFA rights under the terms of the mortgage insurance.
Inspections:
Servicer shall make an inspection of the mortgaged property in the event of delinquency of 90 days and
no contact has been made with the borrower. (Previously, inspections were required even if the Servicer
was in contact with the borrower.)
Servicer shall make an inspection of the mortgaged property if the loss claim for damage exceeds
$5,000, up from $2,500
Notification by Servicer:
Servicer shall notify CHFA of loss or damage to the mortgaged property in excess of $10,000, up from
$2,500
90-Day Delinquencies:
Servicer must comply with CHFA Delinquency Intervention Counseling Program requirements
Servicer must continue to report monthly on a loan by loan basis for any loan that is 90 days or more
delinquent until such time as the loan becomes less than 90 days delinquent or until all insurer payments
have been received by CHFA
Servicer shall send 30-day demand notices to mortgagors, as required by law, advising them of CHFA’s
intent to foreclose, and thereafter, in accordance with CHFA’s Delinquency Intervention Counseling
Program requirements
Foreclosures:
Once a loan becomes 120 days delinquent or is determined to be in default, Servicer must fax the
completed CHFA Foreclosure Approval Initiation/Mitigation/Action Notification form to CHFA.
Foreclosures – Sub-section: CHFA’s Foreclosure Responsibilities:
CHFA no longer designates a foreclosure attorney or issues a written foreclosure order
CHFA will promptly reimburse Servicer for legal fees and expenses and for Servicer’s out-of-pocket
expense reasonably incurred during the foreclosure process. These expenses can only be submitted for
reimbursement after the foreclosure has been completed. CHFA will no longer accept or reimburse for
expenses submitted by the Servicer after six months from the date that the original insurer claim was
filed on HUD and VA insured loans or after six months from title taken date on all other loans
Foreclosures – Sub-section: Servicer’s Foreclosure Responsibilities:
Servicer designates and hires a foreclosure attorney and issues a written foreclosure order
Assist the foreclosure attorney in matters of a legal nature
All other current responsibilities defined in this sub-section
Rev 4-2013 Page 11
12.8 Additional Changes to Current Requirements (cont)
Servicer’s Compensation:
Servicer’s compensation related to delinquency/foreclosure servicing of a CHFA Mortgage shall cease
upon commencement of foreclosure except for HUD insured loans or payoff of the loan in full. To the
extent that CHFA receives gross interest from HUD, or the loan is paid in full, servicer fees related to
this gross interest received by CHFA will be paid to the Servicer upon receipt by CHFA
Agency – Sub-section: Limited Agency:
Servicer, on behalf of CHFA, may endorse insurance checks for any amount up to $10,000, up from
$2,500, without prior approval of CHFA
Servicer, on behalf of CHFA, may submit claims to FHA, VA or private mortgage insurers and must use
CHFA’s mortgagee number. Failure to use CHFA’s mortgagee number will result in a $250 penalty per
claim
Service-Operations:
Servicer shall provide a toll free number for use by CHFA and mortgagors
Rev 4-2013 Page 12
12.9 Safekeeping of Authority Documents
Mortgage records, including but not limited to, promissory notes and mortgage deeds documenting CHFA loans will be
delivered to Servicer for safe keeping. Servicer will act as document custodian for CHFA or designate a document
custodian to hold all CHFA mortgage records. Servicer or its designated document custodian will comply with all state
document preservation requirements applicable to CHFA. These requirements can be found at www.cslib.org.
Mortgage records remain the property of CHFA, and Servicer will provide copies or return originals to CHFA promptly
upon request at no cost to CHFA. Servicer will be responsible for any loss sustained by CHFA resulting from loss or
damage to CHFA mortgage records delivered to Servicer.
Please provide the contact information listed below for the document custodian that will be responsible for these
records.
This information must be completed, signed by an authorized officer of Servicer and the original must be
received by CHFA’s Finance Department no later than February 15, 2005.
Servicer Name
Servicer Address
Document Custodian Info:
Contact Name
Contact Entity (if not Servicer)
Contact Address
Contact Phone
Contact Email
By Authorized Officer (Servicer):
Printed Name:
Any changes to the above information must be mailed to CHFA’s Finance Department 10 business days prior to change
of document custodian.
All records will be shipped (at CHFA’s expense) to the document custodian along with a schedule listing an inventory,
by CHFA loan number, of the mortgage records. Document custodian will sign a copy of the inventory listing upon
delivery to acknowledge receipt of the records. Within 60 days of delivery by CHFA, document custodian will review
and confirm receipt of all items on the inventory listing, and sign and return a second copy of the inventory listing to
CHFA.
Note: During the transition period, should you require documents for any loan that has not yet been delivered to
your document custodian, please call the CHFA Finance Department at 860-571-4292 and we will promptly ship
the requested documents. Initially, CHFA will deliver to all designated document custodians those loans which are
90 days or more delinquent as of December 31, 2004. CHFA anticipates delivery of all remaining loan documents to
each document custodian by June 30, 2005.
Rev 4-2013 Page 13
12.10 CHFA Delinquency Intervention Counseling Program
Connecticut Housing Finance Authority (CHFA) offers delinquency intervention counseling to borrowers who are sixty
(60) days delinquent on their mortgage loan. The servicer sends a letter to the borrower and forwards a referral to a
CHFA approved counseling agency when a borrower is 60 days delinquent. The counseling agency works with the
borrower, develops a financial plan, analyzes their financial situation and helps to develop an action plan to bring the
loan current. The plan is presented to the servicer for approval.
Servicer must simultaneously perform prudent collection efforts in compliance with insurer/guarantor regulations.
Loss Mitigation tools for HUD insured loans include:
Special Forbearance: Provides a written payment plan for the borrower to become current on their mortgage.
Loan Modification: A permanent extension in the loan term that results in a payment that the borrower can afford.
Partial Claim: Allows a delinquent mortgage to be reinstated by advancing HUD funds to pay the arrearage. A
promissory note or “partial claim note” is issued. Currently the partial claim note carries no interest and is not due and
payable until the borrower either pays off the first mortgage or no longer owns the property.
Pre-foreclosure Sale: Allows a borrower in default to sell the property and use the sale proceeds to satisfy the mortgage
debt, even if the proceeds are less than the amount owed.
Deed in Lieu of Foreclosure: The borrower voluntarily deeds the property to HUD in exchange for a release from all
obligations under the mortgage.
Loss Mitigation tools for other insurance type loans include:
Forbearance, modifications, pre-foreclosure sales and deed-in-lieu of foreclosures are also loss mitigation options for
loans insured by private mortgage insurance companies, by the Veteran’s Administration (VA), CHFA insured loans
and uninsured loans. In addition, the private mortgage insurance companies offer a product similar to the partial claim
and the VA offers a Refunding.
Follow-up with the borrower is conducted at one, three and six months to discuss and identify any changes that may
have occurred that will influence that action plan. Follow-up counseling sessions are conducted, as necessary.
Rev 4-2013 Page 14
12.11 Sample Reporting Stream
Borrower: John Smith8
CHFA Loan # 991234, Servicer Loan # 449876
Insured by FHA, Interest P-T-D 4/1/2005
Loan becomes part of this reporting process once it becomes 90 days delinquent. This reporting for this loan begins
with the July 2005 month end reporting.
Date Reporting
7/20/13 No reporting yet to CHFA-Servicer working with borrower. Servicer assigns code 12
indicating that borrower will attempt repayment
7/31/13 90 Day Delinquency Form is submitted with July month end reporting – see attachment a
8/31/13 90 Day Delinquency Form is submitted with August month end reporting – see attachment b
9/2/13 CHFA Foreclosure Approval Initiation/Mitigation/Action Notification form is submitted on
September 2, 2005 to inform CHFA of foreclosure initiation – see attachment c
9/30/13 90 Day Delinquency Form is submitted with September month end reporting – see
attachment d
10/3/13 CHFA Foreclosure Approval Initiation/Mitigation/Action Notification form is submitted on
October 3, 2005 to inform CHFA of Date of First Legal – see attachment e
10/31/13 90 Day Delinquency Form is submitted with October month end reporting – see attachment f
11/30/13 90 Day Delinquency Form is submitted with November month end reporting – see
attachment g
12/20/13 CHFA Foreclosure Approval Initiation/Mitigation/Action Notification form is submitted on
December 20, 2005 to inform CHFA that title has been taken – see attachment h
12/31/13 90 Day Delinquency Form is submitted with December month end reporting – see attachment
i 1/31/14 90 Day Delinquency Form is submitted with January month end reporting – see attachment j
2/26/14 CHFA Foreclosure Approval Initiation/Mitigation/Action Notification form is submitted on
February 26, 2006 to inform CHFA that loan was conveyed to the insurer – see attachment k
2/28/14 90 Day Delinquency Form is submitted with February month end reporting – see attachment
l 3/31/14 90 Day Delinquency Form is submitted with March month end reporting – see attachment m
4/30/14 90 Day Delinquency Form is submitted with April month end reporting – see attachment n
5/31/14 Loan no longer reported to CHFA-all insurer payments have been received by CHFA
Rev 4-2013 Page 15
90 Day Delinquency Form attachment a
Use this form, or spreadsheet or data submission to report ALL loans that are 90 days or more delinquent. Information must be cut-off on the last
business day of each month and be received by CHFA no later than the 10th
day of the following month. If mailing, please submit to the attention of
the Finance Department at the address below. Manually completed forms or spreadsheets may be faxed to (860) 257-8375 or e-mailed to
[email protected]. Data submissions must be e-mailed to [email protected].
Month End Date (month and year) July 2005
CHFA Servicer # 432
Servicer Name Sample Servicer
CHFA Loan # Servicer Loan # Reporting
Code
Date Code
Assigned
Comments
(should include all comments added since the last reporting cycle)
991234 449876 12 7/20/05
Borrower promised payment-wants to keep home-inspection
completed
Rev 4-2013 Page 16
90 Day Delinquency Form attachment b
Use this form, or spreadsheet or data submission to report ALL loans that are 90 days or more delinquent. Information must be cut-off on the last
business day of each month and be received by CHFA no later than the 10th
day of the following month. If mailing, please submit to the attention of
the Finance Department at the address below. Manually completed forms or spreadsheets may be faxed to (860) 257-8375 or e-mailed to
[email protected]. Data submissions must be e-mailed to [email protected].
Month End Date (month and year) August 2005
CHFA Servicer # 432
Servicer Name Sample Servicer
CHFA Loan # Servicer Loan # Reporting
Code
Date Code
Assigned
Comments
(should include all comments added since the last reporting cycle)
991234 449876 12 7/20/05 Have been unable to recontact borrower
Rev 4-2013 Page 17
CHFA Foreclosure Approval Initiation/Mitigation/Action Notification
attachment d Fax to: (860) 257-8375
ATTN: Finance Department
A. Loan Information
Date: 9/2/05
CHFA Loan #: 991234 Servicer Loan #: 449876
Borrower Name(s): John Smith
Insurance Type: FHA VA PMI CHFA Uninsured RDA
Check if Short Sale Prior to Foreclosure Initiation:
B. Foreclosure Initiation Date Counseling Letter Sent: 6/12/05
Owner Occupancy Verified: Yes No (if No, Comment is required)
Check all boxes that may apply:
Code Description Code Description 12 Repayment 10 Partial Claim
09 Forbearance 17 Pre-Foreclosure Sale
28 Modification 47 Deed-In-Lieu
49 Assignment/Refunding I certify that all CHFA guidelines, or any other requirements per the guarantor, were followed prior to initiating foreclosure: (For CHFA
or uninsured loans, HUD guidelines, excluding partial claims should be followed)
By: Authorized Officer
Printed Name: Authorized Officer
Phone #: 860-571-4999
Email Address: [email protected]
Foreclosure Start Date: 9/2/05
(Date Attorney hired)
Attorney/Firm Assigned: Reliable Legal Representation, LLC
C. Foreclosure Action Notification
Date of First Legal: Title Taken Date:
Bankruptcy Status: Chap 7 Chap 13 Bankruptcy Date:
Bankruptcy Dismissal Date:
Date Court/Attorney Proceeds Received: Amount:
Property Conveyance Date:
D. Comments
Rev 4-2013 Page 18
90 Day Delinquency Form attachment d
Use this form, or spreadsheet or data submission to report ALL loans that are 90 days or more delinquent. Information must be cut-off on the last
business day of each month and be received by CHFA no later than the 10th
day of the following month. If mailing, please submit to the attention of
the Finance Department at the address below. Manually completed forms or spreadsheets may be faxed to (860) 257-8375 or e-mailed to
[email protected]. Data submissions must be e-mailed to [email protected].
Month End Date (month and year) September 2005
CHFA Servicer # 432
Servicer Name Sample Servicer
CHFA Loan # Servicer Loan # Reporting
Code
Date Code
Assigned
Comments (should include all comments added since the last reporting cycle)
991234 449876 43 9/2/05 No further contact with borrower - Inspection completed
Rev 4-2013 Page 19
CHFA Foreclosure Approval/Initiation/Mitigation/Action Notification
attachment e Fax to: (860) 257-8375
ATTN: Finance Department
A. Loan Information
Date: 10/3/05
CHFA Loan #: 991234 Servicer Loan #: 449876
Borrower Name(s): John Smith
Insurance Type: FHA VA PMI CHFA Uninsured RDA
Check if Short Sale Prior to Foreclosure Initiation:
B. Foreclosure Initiation Date Counseling Letter Sent:
Owner Occupancy Verified: Yes No (if No, Comment is required)
Check all boxes that may apply:
Code Description Code Description 12 Repayment 10 Partial Claim
09 Forbearance 17 Pre-Foreclosure Sale
28 Modification 47 Deed-In-Lieu
49 Assignment/Refunding
I certify that all CHFA guidelines, or any other requirements per the guarantor, were followed
prior to initiating foreclosure: (For CHFA or uninsured loans, HUD guidelines, excluding partial claims
should be followed)
By:
Printed Name:
Phone #:
Email Address:
Foreclosure Start Date: (Date Attorney hired)
Attorney/Firm Assigned:
C. Foreclosure Action Notification
Date of First Legal: 10/3/05 Title Taken Date:
Bankruptcy Status: Chap 7 Chap 13 Bankruptcy Date:
Bankruptcy Dismissal Date:
Date Court/Attorney Proceeds Received: Amount:
Property Conveyance Date:
D. Comments
Rev 4-2013 Page 20
90 Day Delinquency Form attachment f
Use this form, or spreadsheet or data submission to report ALL loans that are 90 days or more delinquent. Information must be cut-off on the last
business day of each month and be received by CHFA no later than the 10th
day of the following month. If mailing, please submit to the attention of
the Finance Department at the address below. Manually completed forms or spreadsheets may be faxed to (860) 257-8375 or e-mailed to
[email protected]. Data submissions must be e-mailed to [email protected].
Month End Date (month and year) October 2005
CHFA Servicer # 432
Servicer Name Sample Servicer
CHFA Loan # Servicer Loan # Reporting
Code
Date Code
Assigned
Comments (should include all comments added since the last reporting cycle)
991234 449876 68 10/3/05 Judgment entered-title to CHFA within 60 days
Rev 4-2013 Page 21
90 Day Delinquency Form attachment g
Use this form, or spreadsheet or data submission to report ALL loans that are 90 days or more delinquent. Information must be cut-off on the last
business day of each month and be received by CHFA no later than the 10th
day of the following month. If mailing, please submit to the attention of
the Finance Department at the address below. Manually completed forms or spreadsheets may be faxed to (860) 257-8375 or e-mailed to
[email protected]. Data submissions must be e-mailed to [email protected].
Month End Date (month and year) November 2005
CHFA Servicer # 432
Servicer Name Sample Servicer
CHFA Loan # Servicer Loan # Reporting
Code
Date Code
Assigned
Comments (should include all comments added since the last reporting cycle)
991234 449876 68 10/3/05
Judgment entered-title to CHFA within 30 days-property inspection
done 11/2/05
Rev 4-2013 Page 22
CHFA Foreclosure Approval Initiation/Mitigation/Action Notification attachment h
Fax to: (860) 257-8375
ATTN: Finance Department
A. Loan Information
Date: 12/20/05
CHFA Loan #: 991234 Servicer Loan #: 449876
Borrower Name(s): John Smith
Insurance Type: FHA VA PMI CHFA Uninsured RDA
Check if Short Sale Prior to Foreclosure Initiation:
B. Foreclosure Initiation Date Counseling Letter Sent:
Owner Occupancy Verified: Yes No (if No, Comment is required)
Check all boxes that may apply:
Code Description Code Description 12 Repayment 10 Partial Claim
09 Forbearance 17 Pre-Foreclosure Sale
28 Modification 47 Deed-In-Lieu
49 Assignment/Refunding
I certify that all CHFA guidelines, or any other requirements per the guarantor, were
followed prior to initiating foreclosure: (For CHFA or uninsured loans, HUD guidelines, excluding partial
claims should be followed)
By:
Printed Name:
Phone #:
Email Address:
Foreclosure Start Date: (Date Attorney hired)
Attorney/Firm Assigned:
C. Foreclosure Action Notification
Date of First Legal: Title Taken Date: 12/20/05
Bankruptcy Status: Chap 7 Chap 13 Bankruptcy Date:
Bankruptcy Dismissal Date:
Date Court/Attorney Proceeds Received: Amount:
Property Conveyance Date:
D. Comments
Rev 4-2013 Page 23
90 Day Delinquency Form attachment i
Use this form, or spreadsheet or data submission to report ALL loans that are 90 days or more delinquent. Information must be cut-off on the last
business day of each month and be received by CHFA no later than the 10th
day of the following month. If mailing, please submit to the attention of
the Finance Department at the address below. Manually completed forms or spreadsheets may be faxed to (860) 257-8375 or e-mailed to
[email protected]. Data submissions must be e-mailed to [email protected].
Month End Date (month and year) December 2005
CHFA Servicer # 432
Servicer Name Sample Servicer
CHFA Loan # Servicer Loan # Reporting
Code
Date Code
Assigned
Comments (should include all comments added since the last reporting cycle)
991234 449876 68 10/3/05 Forc completed – ejecting borrower-remove from CHFA trail
Rev 4-2013 Page 24
90 Day Delinquency Form attachment j
Use this form, or spreadsheet or data submission to report ALL loans that are 90 days or more delinquent. Information must be cut-off on the last
business day of each month and be received by CHFA no later than the 10th
day of the following month. If mailing, please submit to the attention of
the Finance Department at the address below. Manually completed forms or spreadsheets may be faxed to (860) 257-8375 or e-mailed to
[email protected]. Data submissions must be e-mailed to [email protected].
Month End Date (month and year) January 2006
CHFA Servicer # 432
Servicer Name Sample Servicer
CHFA Loan # Servicer Loan # Reporting
Code
Date Code
Assigned
Comments
(should include all comments added since the last reporting cycle)
991234 449876 11 1/15/06 Unable to submit-occupied
Rev 4-2013 Page 25
CHFA Foreclosure Approval Initiation/Mitigation/Action Notification attachment k Fax to: (860) 257-8375
ATTN: Finance Department
A. Loan Information
Date: 2/26/06
CHFA Loan #: 991234 Servicer Loan #: 449876
Borrower Name(s): John Smith
Insurance Type: FHA VA PMI CHFA Uninsured RDA
Check if Short Sale Prior to Foreclosure Initiation:
B. Foreclosure Initiation Date Counseling Letter Sent:
Owner Occupancy Verified: Yes No (if No, Comment is required)
Check all boxes that may apply:
Code Description Code Description 12 Repayment 10 Partial Claim
09 Forbearance 17 Pre-Foreclosure Sale
28 Modification 47 Deed-In-Lieu
49 Assignment/Refunding I certify that all CHFA guidelines, or any other requirements per the guarantor, were
followed prior to initiating foreclosure: (For CHFA or uninsured loans, HUD guidelines, excluding partial claims should
be followed)
By:
Printed Name:
Phone #:
Email Address:
Foreclosure Start Date: (Date Attorney hired)
Attorney/Firm Assigned:
C. Foreclosure Action Notification
Date of First Legal: Title Taken Date:
Bankruptcy Status: Chap 7 Chap 13 Bankruptcy Date:
Bankruptcy Dismissal Date:
Date Court/Attorney Proceeds Received: Amount:
Property Conveyance Date: 2/26/06
D. Comments
Rev 4-2013 Page 26
90 Day Delinquency Form attachment l
Use this form, or spreadsheet or data submission to report ALL loans that are 90 days or more delinquent. Information must be cut-off on the last
business day of each month and be received by CHFA no later than the 10th
day of the following month. If mailing, please submit to the attention of
the Finance Department at the address below. Manually completed forms or spreadsheets may be faxed to (860) 257-8375 or e-mailed to
[email protected]. Data submissions must be e-mailed to [email protected].
Month End Date (month and year) February 2006
CHFA Servicer # 432
Servicer Name Sample Servicer
CHFA Loan # Servicer Loan # Reporting
Code
Date Code
Assigned
Comments (should include all comments added since the last reporting cycle)
991234 449876 46 2/26/06
Borrower ejected – claim being prepared. Property conveyed, claim
submitted
Rev 4-2013 Page 27
90 Day Delinquency Form attachment m
Use this form, or spreadsheet or data submission to report ALL loans that are 90 days or more delinquent. Information must be cut-off on the last
business day of each month and be received by CHFA no later than the 10th
day of the following month. If mailing, please submit to the attention of
the Finance Department at the address below. Manually completed forms or spreadsheets may be faxed to (860) 257-8375 or e-mailed to
[email protected]. Data submissions must be e-mailed to [email protected].
Month End Date (month and year) March 2006
CHFA Servicer # 432
Servicer Name Sample Servicer
CHFA Loan # Servicer Loan # Reporting
Code
Date Code
Assigned
Comments (should include all comments added since the last reporting cycle)
991234 449876 46 2/26/06 PA Proceeds received by CHFA – expenses submitted to HUD
Rev 4-2013 Page 28
90 Day Delinquency Form attachment n
Use this form, or spreadsheet or data submission to report ALL loans that are 90 days or more delinquent. Information must be cut-off on the last
business day of each month and be received by CHFA no later than the 10th
day of the following month. If mailing, please submit to the attention of
the Finance Department at the address below. Manually completed forms or spreadsheets may be faxed to (860) 257-8375 or e-mailed to
[email protected]. Data submissions must be e-mailed to [email protected].
Month End Date (month and year) April 2006
CHFA Servicer # 432
Servicer Name Sample Servicer
CHFA Loan # Servicer Loan # Reporting
Code
Date Code
Assigned
Comments (should include all comments added since the last reporting cycle)
991234 449876 45 4/6/06 Part B received by CHFA-Additional expenses submitted to CHFA
Rev. 11-2017 Page 2
SECTION 14 – Glossary of Terms
As used in this Manual, the following words and terms have the meanings set forth below:
Acquisition Cost: Means the cost of acquiring the eligible dwelling from the Seller as a
completed residence. Usual and reasonable settlement or financing costs are not included.
Act: Title 8, Chapter 134 of the Connecticut General Statutes, as amended, and the procedures
of the Authority adopted hereto.
Area of Chronic Economic Distress: An area designated as such by the State and
approved by the Federal Secretaries of the Treasury and Housing and Urban Development in
accordance with criteria established under the Code.
Bonds: Bonds issued by CHFA to finance its Home Mortgage Purchase Program.
CHFA: Connecticut Housing Finance Authority
C4C: Capital For Change, Inc. (CHFA DAP 2nd
Mortgage Servicer Eff. 6/1/2016 F/K/A CHIF)
Code: The Internal Revenue Code of 1986, as amended and rulings and regulations thereunder.
Commitment: A written obligation to purchase a Loan in the amount and upon terms
specified, issued by CHFA after review and acceptance of the Loan submission documents
submitted to CHFA from a Participating Lender.
DAP 2nd Mortgage: State of Connecticut 2nd
Mortgage Downpayment Assistance Program
(DAP) to eligible homebuyers in conjunction with a CHFA 1st mortgage.
Eligible Borrower: Any person meeting the requirements set forth in Section 3.1 of this
Manual.
Eligible Dwelling: Any residential structure which meets the requirements set forth in
Section 3.2 of this Manual.
Escrow Payments: Any payments made by and Eligible Borrower to a Participating Lender
or Servicer, pursuant to the terms of a Loan on account of or with respect to: taxes, assessments,
insurance or similar charges or premiums.
Family Size: The number of persons in the family unit of an applicant for a CHFA Mortgage
Loan including all proposed owner-occupants, and all other proposed residents who will occupy
the residence after closing.
Rev. 11-2017 Page 3
FHA: Federal Housing Administration, aka HUD (Housing and Urban Development)
FHLMC: Federal Home Loan Mortgage Corporation, aka Freddie Mac.
FNMA: Federal national Mortgage Association, aka Fannie Mae
Home Mortgage Servicing Agreement: The agreement between CHFA and a Servicer
pursuant to which Loans are serviced.
Homeownership Program: These are lower interest rate first mortgages specifically for
residents of government-subsidized rental housing who want to purchase a home.
Household Income: Total aggregate household income (gross income) of the borrower and
co-borrower.
Loan or Mortgage Loan: A loan to an Eligible to finance the purchase or refinance of an
Eligible Dwelling which meets the CHFA guidelines set forth in this Manual.
Master Commitment Agreement for Mortgage Purchases: The agreement between
CHFA and a Participating Lender which defines requirements, obligations, and rights pertaining
to the issuance of a Commitment and the purchase of a loan by CHFA.
Missing Exhibits Letter: A letter from CHFA to the Participating Lender suspending
further processing of an application until missing exhibits documentation or other action
specified in letter are received, corrected or clarified.
Newly-Constructed Homes: Are homes never occupied prior to CHFA loan commitment.
Non-Qualified Rehabilitation: Rehabilitation meeting the criteria specified in Section 4 of
this Manual even though it does not meet Federal criteria for Qualified Rehabilitation.
Owner-Occupancy or Owner-Occupied: The statutory requirement that each Eligible
Borrower live in the Eligible Dwelling as a principal residence (i.e., permanent and primary
residence).
Participating Lender: Any institution which is licensed to do business in the State, legally
authorized to make mortgage loans of the general character of mortgage Loans, which meets the
qualifications for Participating Lender as set forth in this Manual, has been approved by CHFA,
and has entered into a Master Commitment Agreement for Mortgage Purchases.
Program: The Authority’s Home Mortgage Purchase Program.
Prior Homeowner: A borrower who owns or has owned a home within three years
preceding the date of application.
Rev. 11-2017 Page 4
Private Mortgage Insurance Company or PMI: Any insurance company licensed to
do business in the State of Connecticut, authorized to issue mortgage insurance, and approved by
CHFA.
Qualified Census Tract: A census tract in which 70% or more of the families have a
median income of 80% or less of the statewide median family income.
Qualified Rehabilitation: An existing 1-4 family home eligible for rehabilitation
refinancing, see Section 4 of this Manual.
Qualifying Income: Amount of gross monthly income used to calculate Eligible
Borrower(s) capacity to repay the mortgage loan debt. All sources of income i.e. base salary;
overtime; bonuses; commission; dividend/interest; Social Security; Disability, etc. will be
included in the income calculation.
USDA- RD: Rural Development, aka (United States Department of Agriculture) or RDA
Rehabilitation Mortgage Loan: First mortgages for both first-time homebuyers who wish
to purchase and rehabilitate a home and for existing homeowners who wish to keep and
rehabilitate their present home.
Seller: The seller of the Eligible Dwelling to the Eligible Borrower.
Servicer: A participating Lender or designated servicer, approved by CHFA, which has
executed a Home Mortgage Servicing Agreement.
State: The State of Connecticut
Targeted Area: An area which is either a Qualified Census Tract or in an Area of Chronic
Economic Distress. Targeted Areas recognized by CHFA are listed on website www.CHFA.org
VA: Veterans Administration of the United States of America.